UK business expenditure on R&D has fallen for 2 years

Total UK business expenditure on R&D has fallen for 2 years and is now at the same level as 2018.

ONS data published this week shows that expenditure on research and development (R&D) performed by UK businesses was £49.97 billion in 2023.

While this represents an increase in cash terms from 2022 and is consistent with annual cash increases in recent years, high inflation means business R&D investment in real terms (constant prices) has fallen in the last two years and was the same in 2023 as it was in 2018. This is concerning especially when approximately two-thirds of R&D in the UK is carried out by businesses and is crucial to meeting ambitions of a more research-intensive UK and driving growth in the UK economy.

We proposed a series of actions and recommendations in our report “Backing Business R&D” to ensure the policy landscape is predictable and fit for purpose, increase and improve support across different stages of research and innovation and leverage regional strengths in R&D.

As we move towards the Spending Review and the publication of the Industrial Strategy we will be pushing the Government to adopt these recommendations to encourage greater business investment in R&D.