UK business has increased spending on innovation by more than £1bn while the number of people working on research and development is at a record high, new figures reveal.
But spending as a percentage of GDP remains well behind that of other countries and has not changed since 2014.
Spending on R&D grew to £22.2bn in 2016, the latest year available, according to newly released figured from the Office for National Statistics, up more than five per cent on the previous year.
"This continues the growth of more than £1bn a year since 2013," said ONS statistician Daniel Grove. "2016 also saw employment in R&D reach its highest-ever level, accounting for over 200,000 full-time-equivalents."
Research into cars experienced the biggest boom, growing by 20 per cent alone and accounting for almost half of all additional spending in 2016. Cars and related parts accounts for more than 15 per cent of total R&D spend and is second only to pharmaceuticals research. Aerospace research spend also grew, up 12 per cent to £1.7bn.
Funding from overseas fell eight per cent to £3.5bn - its lowest since 2009 - while funding from the UK government fell for the second year in a row, declining five per cent. However, cash from business boosted overall growth, up nine per cent to £16.2bn and accounting for 73 per cent of all funding.
“Even against an uncertain backdrop, British businesses have increased their R&D spend to record levels," said Tom Thackray, innovation director at the Confederation of British Industry.
"Firms know that innovation can have a fundamental role in helping them grow and become more productive in challenging times. However, the total level of spending is still far too low by international standards."
Theresa May has promised to boost R&D spending, with £2.3bn in additional spending coming in this week's budget with the goal of getting it up to 2.4 per cent of GDP by 2027.
Currently it stands at 1.1 per cent, a figure that has remained unchanged for the past three years.
Just over two per cent of GDP across the EU goes towards R&D, according to the most recent data from Eurostat, with a goal of three per cent by 2020. The US, China and Japan also have expenditure of more than two per cent.