Government Research And Development Spending Is Vital To Rectify UK Private R and D Investment Stagnation, Says Ncub

8th August 2024

New data released by the ONS has revealed, indicatively, that the total spend on research and development (R&D) across the UK reduced from 2.81% of GDP in 2021 to 2.77% of GDP in 2022. The level of investment dropped by 0.11%, an £80 million reduction in real terms between 2021 and 2022.

We are calling on the Government to ramp up R&D investment to help rectify this issue and to help spark business spending. This comes as we share new NCUB analysis today revealing that government R&D spending leverages almost twice as much business investment as previously thought.

Key points from the data include:

Indicatively, the total spend on R&D across the UK reduced from 2.97% of GDP in 2020 to 2.77% of GDP in 2022, highlighting a concerning drop.

The level of investment dropped by 0.11%, an £80 million reduction in real terms between 2021-22.

New NCUB analysis reveals that for every £1 spent by the Government on R&D, an additional £3.09 to £4.02 is then spent by businesses investing in UK R&D. This is nearly twice as high as previously thought.

Commenting on the analysis, Rosalind Gill, Head of Policy and Engagement at the National Centre for Universities and Business (NCUB) said: "The ONS has revealed that spending on R&D dropped by 0.11% between 2022 and 2021. This is hugely concerning and should be ringing alarm bells for the new Government. It equates to £80 million less being spent on R&D in the UK than in the previous year.

The data also reflects that our R&D intensity has drastically declined since 2020. The UK falls behind G7 peers like the US, Japan, and Germany. The power of investing in UK research simply cannot be underestimated and the UK must remain competitive to drive economic growth and prosperity."

Gill continued: “Today's release by the ONS is timely - today we publish our new analysis that shows that for every £1 spent by the Government on R&D, an additional £3.09 to £4.02 is then spent by businesses investing in UK R&D. This is nearly twice as high as previously thought. This is a high return on public investment and underlines the importance of public research funding. Only by fostering an environment conducive to research, innovation and collaboration, can the UK maintain its position as a major economic player, driving prosperity and opportunity.”

Gill concluded: “These two new releases in tandem show how vital it is that the Government commit to a plan to restore economic growth. This is critical to raise living standards and investment in public services. We live in an age where technology is advancing so rapidly that research and innovation must be at the heart of the UK’s growth plan or we risk slipping behind other nations. Businesses are by far the largest investors in UK research, spending close to £50 billion annually – however levels of business R&D investment in the UK has dropped in recent months despite growing in other countries.

The Government must commit to long-term, globally competitive rates of public funding for research, as well as work with all stakeholders – businesses, universities, and charities to create a powerful and attractive environment to research, collaborate and innovate.”