The UK will miss a 2027 government target for research and development investment by 26 years if current trends continue, according to analysis by the country’s leading employers group that outlines the challenge facing an economy beset by low productivity.
The CBI called for urgent action to meet the target set in 2017 to spend 2.4 per cent of gross domestic product on R&D within a decade. It will not be met until 2053 based on spending over the past two years, it said.
In 2017, the latest figures available, the government and businesses spent 1.69 per cent of GDP, according to the Office for National Statistics, up just 0.02 percentage points on the year before. The CBI said that was the average rate of growth since 2013.
The UK has not spent more than 1.69 per cent of GDP on R&D since 1990. The mean spend by EU member states is 2.07 per cent.
The government has made increased investment a cornerstone of its industrial strategy. It has committed to lift spending by a total of £7bn between 2017-2022 but relies on the private sector for the bulk of investment.
Total R&D expenditure in 2017 was £34.8bn, an increase of 2.8 per cent on 2016 in real terms. Business spent £23.7bn, up 2.9 per cent in real terms.
However, the growth masked a continuing drop in funding from foreign companies and institutions with operations in the UK, which has taken a further hit since the Brexit vote. Overseas funding fell for a third consecutive year, to £5bn in 2017, a tenth lower than three years earlier.
The CBI is turning to universities to help boost R&D and published its report on Tuesday at the launch of the £40m Nexus innovation hub at the University of Leeds, which will bring together companies, students and academics.
The Changing Nature of R&D report said companies had to exploit data better. The CBI said companies should be able to deduct tax against money invested in data management.
Felicity Burch, digital and innovation director at the CBI, said: “Advanced data analytics are opening up a new frontier for UK R&D. To ensure we benefit we must have a comprehensive road map underpinned by a boost in public funding to spur growth in UK R&D investment.”
She said the government also had to simplify access to innovation support through a “one-stop” shop.
Only 4 per cent of companies report having the right people, tools and data to be able to draw meaningful insights from information, she said.
Lisa Roberts, deputy vice-chancellor of the University of Leeds, said the Nexus centre was a “step-change” in how the university worked with business. “There has never been a better time for universities and businesses to collaborate to ensure we meet the 2.4 per cent target,” she said.
The Department for Business Energy and Industrial Strategy did not respond to a request for comment.
