UK R&D Expenditure Continues to Rise

Published on 28/11/2019 by ATI

The latest figures released by the Office for National Statistics ‘Business enterprise research and development, UK: 2018’ report, reveals that expenditure on research and development (R&D) by UK businesses continues to grow, “expanding by £1.4 billion to £25.0 billion in 2018, an increase of 5.8%”.

R&D expenditure of UK businesses continues to follow a long-term upward trend. These new figures are confidently up from the £23.7 billion in 2017 (an increase of 5.8%), particularly when considering the average annual growth rate since 2007 was 4.4%.

The report shows that Pharmaceuticals remains the largest product group performing R&D, with £4.5 billion expenditure, representing a 3.3% (£143 million) increase on 2017. This product group accounted for 18% of total expenditure performed in UK businesses, unchanged from 2017.

However, the largest increase in R&D expenditure by product group was Aerospace, which saw a £210 million increase (14%) – so it is good news for Spaceport Cornwall! The aerospace, telecommunications and manufactured goods sectors recorded the largest growth in R&D spend in 2018, while the food and drink sector recorded the biggest fall.

Employment in research and development (R&D) also soared to its highest level in 2018, to 250,000 FTEs (full-time equivalents). It is a strong increase of 17,000 (7.3%) since 2017 and an abundance of almost 100,000 since 2009. Employment in R&D is split between three professional categories: scientists and engineers (researchers), technicians (including lab assistants and draughtsmen) and all other support staff.

R&D expenditure in the South West increased by 5.5%, falling slightly short of the UK average increase (5.8%), but it is positively rising nonetheless. The East and South East of England continue to dominate R&D in the UK, with the two regions accounting for a combined 41% of total UK R&D. Together they employed 87,000, which represented 35% of total R&D employment in 2018.

The largest source of R&D funding in the UK was businesses’ own funds at £19.3 billion, a 8.5% increase on 2017 and accounting for 77% of total UK R&D expenditure. Whilst businesses continue to invest significantly in R&D, overseas funding has been declining steadily since 2010. In 2010, overseas funding accounted for 24% of all R&D funding, valued at £3.8 billion. By 2018, this had fallen to 13% (£3.2 billion). Albeit, European Commission grants, while a relatively minor source of funding, increased from £47 million to £75 million in 2018.

View the original report online at the Office for National Statistics – https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/researchanddevelopmentexpenditure/bulletins/businessenterpriseresearchanddevelopment/2018

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