GovGrant has called for more investment into research and development (R&D) as the latest figures show the UK is well behind its competitors.
The latest R&D figures from Eurostat [Estimates of Research & Development expenditure, show the UK was 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 underinvestment, 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.
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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,” he said.
“That is a massive return on investment.
“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.”