UK R&D spend projected to fall by £4B in 2009

The UK is projected to have a £4 billion fall in R&D spend in 2009, according to a new report, ‘Innovation – Protecting the UK’s Competitiveness’, published by the Management Consultancies Association (MCA).

The report, based on a survey of consultants who work with more than 90 of the UK’s largest firms by market capitalisation, found that 9 out of 10 have cut their capital expenditure - a key measure of innovation - by up to 50 per cent. This translates as a projected fall of almost £4 billion in R&D spend in 2009.  

Four out of 5 respondents believe that the UK’s long term competitiveness is being damaged by lack of investment, while 9 out of 10 cite innovation as a crucial tool to mitigate the effects of the recession.

Over two thirds of respondents supported increased tax breaks for R&D and other capital investment to encourage innovation.  

MCA chief executive Alan Leaman said it is necessary to look beyond the immediate economic crisis. “As soon as innovation stops, companies slip down the league table and start to lose customers. [...] If companies are not able to innovate, they risk being unable to compete on the world stage.”  According to the report, the main barrier to innovation during the recession is that most managers are concentrating resources on short term priorities.