UK business expenditure on research and development (R&D) climbed to £55.6 billion in 2024, a modest 2.3% real-terms increase from 2023, signaling a tentative rebound after two years of decline. However, the National Centre for Universities and Business (NCUB) labels this a “fragile recovery” in its latest analysis, noting stagnation since 2021 peaks amid sectoral imbalances, regional disparities, and a widening gap with global competitors like the US (+7.8%) and Japan (+7.1%). This comes as foreign-owned firms drive nearly 50% of UK R&D, while overall intensity risks costing £10 billion in productivity if trends persist.
Breakdown of 2024 R&D Spending
Total UK business R&D hovered between £54-56 billion in real terms from 2021-2024, a stark contrast to 12% growth in the prior period (2018-2021). The 2024 uptick relied heavily on current expenditures: staff costs rose 5% (accounting for over half the growth), while other current costs edged positive; capital investments plunged, with plant/machinery down 13% and land/buildings off 10%.
Growth masked deep divides. Life sciences, representing 25% of total R&D, dipped 0.8%, creative industries fell 9.7%, and construction plummeted 23.5%. Meanwhile, financial services surged 20.7%, digital & tech 15.9%, and clean energy 13.0%.
| Sector (2022-2024 Growth) | Real Change | 2024 R&D Share |
|---|---|---|
| Financial Services | +20.7% | Significant |
| Digital & Tech | +15.9% | High |
| Clean Energy | +13.0% | Growing |
| Life Sciences | -0.8% | 25% |
| Construction | -23.5% | Declining |
R&D often decoupled from GDP: life sciences saw GDP gains but flat R&D, while financial services boosted R&D despite weak GDP growth.
Regional and Firm Disparities
Regions showed stark contrasts from 2022-2024: West Midlands +22%, London +15%; North East -12%, North West -11% (driven by Cheshire and Merseyside drops), East Midlands -11%. London concentrated spending, with Inner London West at £8.8 billion (66% of London total), versus £30 million in Outer London East/North East (0.2%).
By firm size, large businesses (over 250 employees) claimed 68% of 2024 R&D, SMEs 32%; notably, firms with 0-99 employees contributed 23%, outpacing mid-sized groups (100-399: 15%; 400-999: 14%), especially in services. Foreign multinationals now fund ~50% of UK business R&D (up from prior years), with UK-owned firms declining; greenfield R&D FDI projects fell 30% since 2022/23.
Lagging Global Performance
The UK’s +2.2% growth (to 2024) trailed the Rest of World (+8.1%), US (+7.8%), Japan (+7.1%), China (+3.9%), and EU (+2.9%), per EU Industrial R&D Scoreboard data on top 2,000 firms (covering ~80% national BERD). Broader trends: UK down 6.3% (-£3.4 billion) since 2021; Korea +12.5%, Japan +8.5%, Spain +17%, OECD average +7.2%.
NCUB highlights policy churn, rising costs, high interest rates, and low growth as deterrents, with SMEs facing fragmented support and tight finance. A mere 0.1% R&D intensity drop could erode £10 billion in productivity gains.
NCUB and Leadership Statements
Dr. Joe Marshall, NCUB CEO: “It is encouraging to see business R&D spending picking up after two difficult years. But the recovery is fragile… This recovery is an early signal of renewed confidence, not a full turnaround. Continued commitment from government and industry will be essential.”
Sir John Manzoni, Taskforce Chair (Diageo/SSE): “Britain’s business investment in R&D has fallen by £3.4 billion… Weak growth, rising costs and policy churn are eroding business confidence… The public system needs focus, simplicity and reform.”
Professor Dame Nancy Rothwell, Industrial Strategy Council Deputy Chair: “The UK’s research base is world-class. But to turn that strength into growth, the whole system has to work together… These reforms would help connect our research excellence with industrial capability.”
Sir Jon Symonds, GSK Chair: “We’ve had no shortage of R&D strategies… what’s missing is delivery… Without clear priorities and consistent follow-through, Britain will keep losing projects and talent.”
NCUB urges long-term Industrial R&D Priorities, a single digital support portal, and UKRI accountability for private leverage; a survey of 2,000 firms confirmed low growth stifles R&D.
Policy Calls and Industry Reactions
The NCUB Taskforce, led by Manzoni and backed by industry, demands a “policy reset” for competitiveness: sustained big-performer growth isn’t broad-based, risking further divergence. Campaign for Science and Engineering (CaSE) echoes stability needs, citing regional cash surges (London +23%, West Midlands +31% 2022-2024, unadjusted) but warns of North West reversals.
Positive notes include ONS data confirmation of rebound potential, but consensus stresses urgency—no outright negativity, rather calls for predictable environments amid global surges. LinkedIn discussions amplify £3.4 billion drop concerns since 2021.
Implications for UK Innovation
This fragile uptick, per ONS BERD 2024, underscores risks in a $669 billion-like global R&D race where tech giants dominate. With manufacturing/pharma contractions and SME struggles, UK faces talent/project losses without reform.
For businesses eyeing “UK business R&D 2024” or “BERD recovery,” the data signals cautious optimism: leverage strengths in digital/financial sectors, address drags in life sciences/construction. Sustained policy focus could reverse declines, bolstering productivity in a diverging landscape.
