Commenting on the latest R&D figures from Eurostat [Estimates of Research & Development expenditure – 10 January], where the UK ranked 11th among EU member states for R&D expenditure in 2017, Luke Hamm, chief executive of innovation tax credits specialist GovGrant, said:
“The UK needs to significantly up its R&D spend in the post-Brexit world. Between 2007 and 2017, the UK’s spending on R&D as a percentage of GDP has barely moved, from 1.62% to 1.67%, well behind our major competitors.”
The Government’s industrial strategy aims to rectify this under investment, but the target of investing 2.7% of GDP in innovation by 2027 is not nearly enough. The Eurostat figures show that Sweden, Austria, Denmark and Germany are already investing above 3.0% of GDP on R&D, and the UK is well below the EU average of 2.07%.”
Luke said that, when compared to Korea and Japan, at 4.22% and 3.28% respectively (2015), the Government has to provide the UK economy with significantly more stimulus to meet its ambition to become a global destination of choice for innovative businesses.
Eurostat sends a clear message to the government that its Industrial Strategy lacks the ambition to propel our economy to the front rank of nations that walk the walk on innovation.”
He noted that, where tax credits are concerned, every £1 awarded to innovative businesses via R&D tax credits stimulates between £1.53 and £2.35 in additional R&D expenditure. “The government spends 0.6% of the total tax take on R&D tax credits, and delivers £8.1bn of R&D spend as a result. That is a massive return on investment.”
He said: “In other words, it makes sense to invest in R&D, and for government to reward businesses that do.”
He added: “For those of us who believe that the UK’s economic future is partly governed by its reputation for nurturing and enhancing innovation and technology. The Eurostat figures should be a wake- up call to ministers, and we urge much more substantive action this year.”