A “hugely concerning” drop in the percentage of gross domestic product (GDP) the UK spends on research and development should “ring alarm bells” in government and highlights the need for further public investment, experts have said.
New figures from the Office for National Statistics (ONS) show an indicative drop in the total R&D spend across the UK from 2.81 per cent of GDP in 2021 to 2.77 per cent in 2022. In 2020, it was 2.97 per cent.
The 0.11 per cent drop in the level of investment represented an £80 million reduction in real terms between 2021 and 2022.
The ONS said the business sector accounted for the largest component of R&D expenditure, at £49.9 billion, or 71 per cent of the UK total, followed by the higher education sector, at £16.3 billion (23 per cent).
Rosalind Gill, head of policy and engagement at the National Centre for Universities and Business (NCUB), said the drop was “hugely concerning and should be ringing alarm bells for the new government”.
“The data also reflects that our R&D intensity has drastically declined since 2020,” she said, adding this had led to the country’s falling behind fellow G7 members such as 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,” Ms Gill said.
The ONS release coincided with a new analysis published by the NCUB that estimates that every £1 of public R&D investment stimulates between £0.60 and £1.10 of private R&D investment in the short term, and between £3.09 and £4.02 in the long term – nearly twice as high as was previously thought to be the case.
Compared with other G7 countries, the NCUB analysis finds, the UK has higher returns on public R&D investment in the short term but compares less favourably in the longer term.
The country should therefore “consider how it might better sustain the impacts of public funding to achieve the long-term leveraging effect achieved in other countries with advanced research and innovation systems”, the report says.
There have previously been calls for the UK government to increase the target for R&D spend to 3.5 per cent after a previous target of 2.4 per cent was met years early owing to ONS changes that better captured spending by small businesses.
Ms Gill said the high return on public investment “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,” she added.
Research and innovation “must be at the heart of the UK’s growth plan, or we risk slipping behind other nations”, Ms Gill said.
She highlighted that businesses are “by far the largest investors in UK research”, but levels of investment in the UK have 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.”
