Home Business NewsBusiness R&D spending in the UK hits record high of £26.9bn

R&D spending in the UK hits record high of £26.9bn

by LLB Reporter
19th Nov 21 10:49 am

Expenditure on research and development (R&D) performed by UK businesses (in current prices) grew by £900 million to £26.9 billion in 2020; the increase of 3.5% was similar to recent year-on-year growth, according to the Office for National Statistics.

The software development product group had the largest growth in expenditure on R&D in 2020; with an increase of £314 million (18.3%) to £2.0 billion.

The East of England had the largest growth in the value of regional expenditure, increasing by £425 million (7.8%) to £5.8 billion in 2020.

In 2020, total UK business employment in R&D grew by 18,000 to 283,000 full-time equivalent positions, an increase of 6.8% since 2019.

Mark Tighe, CEO of R&D tax relief specialist Catax, may be of interest: “Industry shrugged off the pandemic to power through and push R&D spending to a record high that still managed to leave inflation in the shade.

“All the talk now is of rising interest rates and prices but it was a different story last year. CPI only rose 0.6% in the year to December so the 3.5% rise in R&D spending is impressive and underlines the UK’s direction of travel. When it comes to high-tech innovation, Britain is still a world leader.

“There are further positives to be found in the labour force, where the number of people employed in R&D roles has ballooned by 6.8% to a record high of 283,000 full-time equivalents. That’s an 83.8% rise on 2010 and, on its own, would raise the prospect of a further jump in spending this year. However, this is where 2021’s ominous spike in inflation could play havoc with that momentum. It’s already running at over 4% with more pain to come.

“The Government’s target of increasing R&D spending to 2.4% of GDP by 2027 is still a long way away. It’s not out of reach but the country will have its work cut out to maintain real-terms growth like this in an increasingly inflationary environment.”

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