Mapping the economy: Using industrial classifications to deliver the UK Industrial Strategy

With the new UK Industrial Strategy, the Office for National Statistics (ONS) is leading a revision of UK SIC codes. Targeting a 2026 release, the aim is to update the system to better represent the modern economy, particularly the digital and service sectors. 

This is an important change, which will support investment and growth. In this article we explore the benefits of this change, and how the UK government can use existing data to support it. 

Challenges in using existing classification systems

Industrial classification systems like Standard Industrial Classification - SIC, NAICS, NACE, and UK SIC 2007 - are essential tools for organising economic data. They help governments, researchers, and businesses analyse industry trends, inform policy, and guide strategic planning. 

However, applying these codes accurately to modern business data presents several challenges:

• Spanning multiple sectors: Today, businesses (from start-ups to large enterprises) often span multiple industry sectors, and therefore multiple classification codes. For example, a company offering software, data, and analytics may not fit neatly into a single category. Hybrid models and digital platforms blur traditional boundaries. Some codes are too broad to capture niche industries, while others are overly specific, leading to fragmentation and reduced data usability.
• Outdated and limited systems and processes: When registering a business in the UK, owners self-select SIC codes via Companies House - a manual process prone to error. When they are available, automated systems can also misclassify due to limited training data. 
• Inconsistent code assignments and integration issues: Public sector procurement increasingly uses CPV codes, which although more industry-specific, currently lack formal mapping to SIC.

To address these issues, it’s been recognised that a combination of technical innovation, regulatory clarity, and cross-government collaboration is needed. 

Why change? Why now? Supporting investment and growth

The new SIC 2026 classifications, will provide a solid foundation for the government, with better representation of sectors to updated frameworks and policies.

The ONS SIC update is an ideal initiative to drive Cross-Government collaboration. The revision is overseen by a cross-government Steering Board, ensuring that the new framework aligns with the UK government's overall industrial vision and that user input from bodies like the Treasury and the Bank of England is considered. 

Not only will it help identify opportunities for investment and growth in targeted sectors, but it will also help with regulatory and compliance issues, where Incorrect classification affects tax reporting, funding eligibility, and regulatory compliance. 

Key benefits of the revision include:

• Accurate economic representation: Updating classifications to reflect emerging sectors like FinTech, AI, and green technologies ensures the UK’s economic data mirrors its strengths and growth areas.
• Data-driven policy making: A refined SIC framework enables better data collection and analysis, supporting targeted policies that foster innovation, attract investment, and build a skilled workforce.
• Recognition of emerging industries: The revision will incorporate new sectors not currently captured, allowing for more responsive and future-proof policymaking.

Going one step further: Unmasking hidden businesses

To identify growth (and risk) areas, particularly in emerging industries such as Fintech, Metaverse and Blockchain organisations, an overhaul was needed to unmask those businesses previously falling through the gaps and becoming hidden in plain sight. The SIC 2026 upgrade will help with this, making it possible to segment and identify these firms in the United Kingdom.

With the aim of improving precision even further in these areas and to support organisations with customers and third parties in multiple geographies, Dun & Bradstreet developed the D&B SIC-8 prior to the ONS upgrade. This extended 8-digit classification system enhances granularity and includes a crosswalk to NAICS, NACE and other global SIC code standards for consistent segmentation.

Without these changes and integrations with other industry classification systems, misclassifications can distort market analysis. For instance, a fintech firm classified under traditional banking may skew sector performance metrics, and in retail, e-commerce platforms often fall between the lines, complicating trend analysis.

Process automation using machine learning is one way to go to improve SIC assignment, in fact Dun & Bradstreet has been doing this for some time and has refined processes that support SIC codification for use across our Data Cloud.  This improves mapping businesses into existing codes, but the new codification is needed to provide the ‘buckets’ to house these businesses currently poorly mapped.  

Conclusion

Accurate industrial classification is vital for meaningful economic analysis and informed decision-making. As industries evolve, so must our classification systems and practices. SIC 2026 is going a long way to making this a reality. However, if you require even more precision for growth and risk decisions in the UK and beyond, it’s time to investigate systems and other data sources that enhance classification further.

If you would like more information on what D&B is doing to improve industry classifications and support your initiatives, please visit the Dun & Bradstreet website or contact us at hello@dnb.com.