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R&D spend is increasing in UK, but still not at the top table

Figures from the Office of National Statistics (ONS) suggest investment towards R&D is heading the right direction, though there is still work to be done to compete with the worlds’ best.

Across all sectors in the UK, R&D spend by private companies increased by 5.8% to £25 billion. Drilling down into these figures, telecoms accounted for £947 million, a year-on-year increase of 25.4%, making it the fastest growing segment. This figure is still significantly down on the historical high of £1.5 billion spent in 2007, though growth is always an encouraging sign.

“The telecoms industry is extremely important to the UK strategically and it is reassuring to see such growth in investment,” said Mark Tighe, CEO of R&D tax relief firm Catax.

“There is still some way to go if this investment is to recover to levels seen before the financial crash, however, and it is vital this happens if Britain is to continue to be a key technological player on the world stage.”

Investment in R&D has become quite a point-of-interest to the UK Government, and measuring R&D investment as a percentage of Gross Domestic Product (GDP) is a key performance indicator of the Industrial Strategy. By 2027, the Government objective is for R&D to make up 2.4% of GDP, though this target also factors in public investment which the ONS figures do not.

In comparison to other nations which the UK aims to compete with the technology segments, the story is perhaps not as encouraging.

Country Percentage of GDP Total in USD ($) billions Researchers per million population
China 1.5 286.4 1096
Finland 2.1 4.9 7011
Germany 1.9 74.1 4318
Israel 3.5 11.6 8250
Japan 2.6 131.8 5328
Korea 3.7 57.2 6856
Sweden 2.1 9.5 6877
USA 1.9 340.7 4217
UK 1.2 33.3 3765

Statistics courtesy of UNESCO (latest available figures)

As may have been suspected, the bigger economies are contributing more cash to R&D efforts, though those who are creating more investment friendly landscapes are also thriving. Israel or Finland might not be spending the most, though the number of researchers is much more concentrated. This is clearly having a positive impact on innovation.

Looking at the comparative figures, the UK might claim to be prioritising R&D to ready the nation for the future, but the numbers do not necessarily support this. If R&D is an indicator of where profits and influence will lie in the future, other technology-orientated nations are in a better place.

What is also worth noting is the figures mentioned above are private investment, not including any expenditure from Government agencies on testbeds, as an example, or academic research. Certain governments have been more proactive when it comes to spending money on innovation in pursuit of glories in the digital world, and the UK is certainly one which has been quite vocal.

Although R&D investment is increasing, across the board the UK is not competing with those nations which would be considered the most innovative. What is worth noting is that the most successful countries are generally those where private industry investment makes up a considerable percentage of GDP, or the larger economies where investment in real terms is eye-wateringly high. Looking at these numbers, the UK falls into neither category.


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