Overall R&D investment increased in cash and real terms in 2024

GERD 2024

The latest GERD release shows that in 2024 the UK invested £79.4 billion in R&D. This continues an existing trend of increasing cash investment in recent years, with £75.8 billion and £71.8 billion invested in 2023 and 2022, respectively, in current (cash) prices. The increase in investment with inflation-adjusted (real terms) prices is not as strong but still follows the increasing trend in the year to 2024. It is important to note that unlike in previous releases, the GERD 2024 release only contains R&D expenditure backdated to 2022.

R&D expenditure by source of funds

Business continues to account for the largest funding share of UK R&D expenditure, with £45 billion in 2024, equivalent to 57% of the UK total. However, when prices are adjusted for inflation, R&D expenditure funded by business remains below its 2022 level of £46 billion.

The strongest year-on-year growth came from overseas funding, which increased by £857 million in real terms between 2023 and 2024. Government funding saw the second-largest increase, rising by £666 million over the same period, driven almost entirely by government sources that include UK Research and Innovation (UKRI) but not including Higher Education Funding Bodies (HEFBs).

HEFBs saw only a small increase of £3 million from 2023 to 2024, and R&D expenditure funded by HEFBs remains 10% lower than in 2022. By contrast, R&D expenditure funded by the higher education sector has continued to rise, increasing from £6.6 billion in 2022 to £7.1 billion in 2023 and £7.4 billion in 2024.

Private non-profit organisations account for the smallest funding share of R&D expenditure, at 2.4% of the UK total. Spending in this sector fell by £70 million between 2022 and 2023, but the pace of decline has slowed, with a further reduction of only £7 million between 2023 and 2024.

Regional expenditure by sector

Overall, we continue to see an uneven distribution of R&D expenditure between UK regions. The highest levels of R&D expenditure across the board tend to be seen in London, the South East, and East of England. However, when broken down by sector of performance we see higher levels of R&D expenditure in other regions for certain sectors. For example, Scotland is in the top three regions for R&D expenditure by Higher Education and the South West is in the top three for government R&D expenditure.

Across the regions, higher education R&D expenditure in real terms has been broadly consistent year on year, with cash increases being negated by inflation. Government R&D expenditure has seen some real terms increases across many regions, but it is particularly apparent in London and the South East.

For business enterprise, after accounting for inflation, spending remains broadly flat for many regions with a few notable exceptions. There is a decline in real terms business R&D expenditure in the North West. This is consistent with CaSE’s earlier reporting of this regional trend when only current prices were available, see our Business Expenditure on R&D (BERD) analysis.

Business expenditure has increased slightly in London and the West Midlands from 2022 to 2024 by 13% and 18%, respectively, and we see a reverse of the decline seen in the South West, with 2024 levels being 4% above 2022, after a 16% decline in 2023. The North East, Wales, and Northern Ireland are consistently in the bottom three regions for R&D expenditure across all sectors, with no notable change across the three years.

GERD as a percentage of GDP

This latest ONS release also includes data on R&D expenditure as a percentage of GDP.  

Last year we saw a peak in R&D expenditure as a percentage of GDP in 2020, then a decline to 2023. Data this year shows that there is still a declining trend in R&D expenditure as percentage of GDP, however the decline is starting to plateau, from 2.73% in 2022 to 2.71% in 2024. The ONS report that this decrease is related to changes in the level of GDP rather than R&D.