The Tony Blair Institute for Global Change is a non-profit, non-partisan organization that advises governments and leaders on strategy, policy and delivery, unlocking the power of technology. They have recently completed a 54-page report titled A UK Quantum Strategy for Sovereignty and Scale that examines the current status of quantum developments in the UK as well as the rest of the world and recommends a strategy that should be taken to enable the UK to lead in quantum. Here is GQI’s summary of the key points in this report.
The report asserts that quantum technology represents the next critical stage of the technology revolution, following areas like Artificial Intelligence (AI) and biotech. As classical approaches hit physical and computational limits—seen in AI resource bottlenecks and complex drug discovery simulations—quantum technologies offer the potential to remove these hurdles and expand the boundaries of possibility. The global quantum market is rapidly growing and consolidating, with its estimated value-add across the automotive, chemical, financial, and life-sciences industries projected to exceed $1 trillion by 2035. Countries like China ($15 billion investment) and the EU are already accelerating their quantum strategies.
Despite a strong starting point, the UK risks failing to convert its leadership in quantum research into commercial scale and strategic value. The UK ranks third globally in academic research and receives the second-highest amount of venture capital (VC) investment, largely due to the foresight of the 2014 National Quantum Technologies Programme. However, a strong R&D base is insufficient; the report warns that the UK’s quantum ecosystem is strategically exposed, lacking the necessary high-risk capital, infrastructure, and early corporate and government adoption needed to build globally competitive companies. This deficiency is causing UK-based companies to look elsewhere, citing examples like Oxford Ionics’ acquisition by US-based IonQ, PsiQuantum’s scaling primarily in the US, and Universal Quantum setting up a Hamburg office to win a major German procurement contract. The report stresses that success requires a coordinated approach across research, finance, infrastructure, and procurement, treating quantum not as a niche area but as a catalyst for other crucial technologies like AI.
🔬 The Technical State of Play and Policy Implications
Quantum technologies harness quantum mechanics—including superposition, entanglement, and tunnelling—to enable breakthroughs in computing, sensing, and secure communication. These are categorized into three main areas:
- Quantum Sensing: Uses quantum states for unprecedented precision in detecting physical phenomena. Applications include optically pumped magnetometer-based medical imaging (less invasive than cryogenic options), quantum-enabled laser spectroscopy for gas detection and environmental monitoring, and the development of quantum-navigation systems that do not rely on vulnerable GPS signals.
- Quantum Communication: Leverages entanglement and quantum-key distribution (QKD) for ultra-secure transmission of information, trialled to protect critical infrastructure from future cyber-threats.
- Quantum Computing: The most strategically and economically valuable application, using qubits to perform calculations exponentially faster than classical computers. It is seen as a key component for advancing technologies like AI, where compute capacity is a bottleneck. While large-scale, fault-tolerant machines are credibly forecasted for 2030 to 2035, early industry trials are already underway.
The report highlights that the key bottlenecks to commercialization are generally engineering-related rather than theoretical. This includes the fragility of qubits, dependence on costly cryogenics, and the difficulty of industrial-scale, precise photonic components for networks. Quantum progress depends on a delicate, coordinated ecosystem where basic science, translational research, startups, infrastructure, and strong demand-signaling all move in lockstep.
The report introduces the Quantum National-Security Imperative. Quantum computers threaten to break classical encryption methods, an event dubbed “Q-Day,” exposing critical infrastructure and institutions. Adversaries are already engaging in a “harvest now, decrypt later” strategy. The defensive imperative is to transition government and business systems to post-quantum encryption.
🌎 Global Industry Landscape and UK’s Fragile Position
The global quantum market is small but accelerating, with a 50% year-on-year growth in startup investment to $2 billion in 2024. However, this investment is spread over 54 fewer deals than in 2023, indicating a trend of market consolidation where investors concentrate their bets on more mature companies.
The UK’s position is described as fragile:
- R&D Base: The UK is a pioneer in quantum policy and holds a strong research base, ranking third in top-cited papers behind the US and China. However, its top-tier output in elite journals like Nature and Science is only about half that of Germany and one-fifth of the US total.
- Startups and Capital: The UK boasts the second-highest number of pure-play quantum companies globally (64), only trailing the US (148), and was second in VC funding in 2024. Yet, the report repeats the concern that leading firms are relocating or being acquired (e.g., PsiQuantum, Universal Quantum, Oxford Ionics).
- Public Investment: The UK is ahead of European rivals in total public funding but lags significantly behind China ($15.3 billion) and the US ($7.67 billion). Crucially, its largest funding announcements for hardware projects are ten times smaller than those in France and Australia, a disparity that encourages companies to seek revenue elsewhere.
- Corporate Adoption: The UK trails countries like the Netherlands, Australia, and Canada in early industry adoption. This lack of “quantum readiness” restricts the economic value gained and limits the critical demand-signaling needed for UK quantum companies to scale.
- Extended Quantum Stack: While the UK is strong in R&D-intensive pure-play quantum companies, it is weak in the “extended quantum stack,” which includes suppliers of enabling components (lasers, cryogenics, superconductors) and scaling infrastructure (advanced packaging, nanofabrication). When this wider stack is considered, the UK hosts only 513 companies, fewer than Germany (1,128), France (658), and Canada (689).
The strategic implication is clear: R&D excellence is necessary but not sufficient for long-term competitiveness; the UK must accelerate commercialization and scaling efforts.
🛠️ The Three Core Challenges and Recommendations
The UK’s structural weaknesses are summarized into three core challenges:
1. Research and Development: Bridging the “Translation Gap”
The challenge is converting world-class physics into engineered, deployable prototypes. The existing quantum hubs are excellent at foundational science but were not designed to overcome short-term engineering bottlenecks blocking commercial deployment.
Recommendation:
- Set up a pilot Quantum Translational Research Group. This group, potentially modeled as a Focused Research Organisation (FRO) or embedded unit within existing hubs, would work directly with industry to tackle short-term engineering barriers and commercial applications, such as improving cryogenic-refrigeration technologies or using AI for error correction.
2. Commercialisation and Deployment: Closing the “Capital and Adoption Gap”
The challenge is the combination of limited high-risk investment and weak, fragmented demand. This is exemplified by the loss of Oxford Ionics and the slower movement of UK public investment vehicles like the British Business Bank (BBB) and the National Wealth Fund (NWF).
Supply-Side Recommendations (Backing National Winners):
- Revive and modernise the Corporate Venturing Scheme (CVS). A new CVS should offer targeted tax relief for corporates investing in early-stage deep-tech firms, alongside co-investment from the BBB and NWF, the latter acting as a vehicle to channel UK pension funds.
- Prioritize quantum for BBB and NWF to lead co-investment into quantum-enabling infrastructure, de-risking the entire sector for private investors.
Demand-Side Recommendations (Driving Adoption):
- Portion off £200 million of the £670 million investment for quantum in the Invest 2035 Industrial Strategy to run two to three major procurement competitions exclusively for UK-based quantum companies. This requires taking big bets to give national champions revenue streams for global scale.
- Hire an individual quantum-procurement champion within each relevant government department (DSIT, MoD, Department for Business and Trade). These champions would have technical expertise, run competitions, and drive the adoption of solutions, including Advanced Market Commitments (AMCs), which delay payment until the system is built.
- Introduce fiscal incentives for large UK-based companies (in finance, health care) to fund Quantum Proofs of Concept (PoCs), such as enhanced R&D tax reliefs or reduced employer National Insurance contributions for quantum-related hires.
- Establish a dedicated quantum-technology coordination function to streamline access to infrastructure and bridge the gap between R&D, startups, and industry verticals. This function would provide clear technology-adoption guidance and highlight successful PoCs.
3. Scale, Sovereignty and Security: Addressing the “Stack Gap”
The challenge is the UK’s shallow access to critical inputs and scaling infrastructure (the “extended quantum stack”), which underpins the dual-use nature of the technology and the UK’s capacity for technological sovereignty.
Recommendations:
- Ensure access to quantum-enabling infrastructure and the broader quantum supply chain by combining domestic investment with strategic international partnerships.
- Map capabilities and identify gaps. The Office for Quantum should lead a systematic mapping of UK capabilities and vulnerabilities to inform investment and partnership priorities.
- Invest in critical infrastructure at home where cost-effective or strategically essential (e.g., cryogenics capacity in hubs like Daresbury). The NWF should co-invest in this infrastructure to de-risk private investment in quantum firms.
- Forge strategic bilateral partnerships with allies such as Germany (photonics, lasers), the Netherlands (advanced semiconductors), Japan (advanced materials, electronics), and Canada (quantum cryptography, software) to secure access to capabilities the UK cannot feasibly onshore entirely.
- Prepare for Post-Quantum Cryptography. The government should:
- Require regulated critical industries to publish biennial updates on their quantum-migration plans through bodies like the National Cyber Security Centre (NCSC) and the MI5 National Protective Security Authority.
- These updates must include audits of public-key cryptography, inventories of cryptographic assets, and evidence of hybrid solutions or trials, forcing boards to treat migration as a strategic priority.
🏁 Conclusion
The report concludes that the UK is at a critical inflection point where the focus must shift from discovery to deployment. Without a pivot to a proactive government industrial strategy centered on commercialization, the UK risks becoming an incubator for other countries’ quantum industries and forfeiting sovereignty over a general-purpose technology that will define 21st-century economic and geopolitical power. The time for cautious, fragmented investment is over; the UK must take large, strategic bets to build dedicated translational engineering capacity, drive high-risk capital, create early big-ticket demand, and secure its extended quantum stack.
The full report can be accessed on the website of the Tony Blair Institute for Global Change here.
November 3, 2025
