Spending by UK businesses on research and development (R&D) grew at its lowest rate in seven years in 2019, according to figures released today.
UK businesses spent a total of £25.9bn on research and development (R&D) in 2019, an increase of just 3.3 per cent on the previous year’s spending.
This rate of growth is the lowest since 2012, according to the Office for National Statistics (ONS).
The pharmaceutical industry was the biggest beneficiary of R&D, followed by vehicle manufacturers.
These products accounted for just under a third of total R&D spending from businesses last year.
There was a more promising performance from small to medium enterprises, who accounted for a record five per cent of business spending on R&D.
The increased tax relief for R&D for small businesses, introduced back in 2015, may have boosted spending.
Overall, though, tepid spending from UK businesses may come as a disappointment to the government, who pledged £100m last year in grant programmes to encourage innovation.
Foreign businesses are also investing less and less in UK R&D, with only 15 per cent of spending coming from these businesses, down from 24 per cent in 2010.
The outlook for foreign spending in the UK looks uncertain, as EY reported back in May that the UK had lost its top spot for FDI funding to France.
Annual spending on R&D in defence by the UK government has only increased by 0.7 per cent in the past five years.
However, with £1.5bn of Boris Johnson’s pledged increase in defence funds earmarked for research, this should increase over the next four years.