The latest figures from business and financial adviser Grant Thornton UK LLP's Agents of Growth* series suggest that the UK's mid-sized businesses** (MSBs) will continue to drive the country's R&D agenda in the year ahead and be the largest investor in new technologies.
The research finds that over the past 12 months, MSB expenditure on R&D has grown by 2.7%; marginally (0.3pp) ahead of the 2.4% growth reported by their larger and smaller counterparts. Over the next year, nearly a quarter (23%) of UK MSBs are expected to increase their investment in R&D.
Although improving, the figures still suggest that the UK remains far behind other developed economies in terms of its R&D expenditure. With some reports*** ranking the UK as low as 19th amongst peer economies in the OECD, many will wonder whether the impact of the current R&D tax credit regimes will be sufficient in helping the country meet EU R&D intensity targets of 3% of GDP by 2020.
Grant Thornton's research also suggests the UK's MSB population is anticipating faster growth in turnover (6.7%), exports (4.5%), capital investment (2.8%), and employment (2.7%) than the UK business population as a whole.
Dominic Preston, Head of Innovation at Grant Thornton UK LLP, commented: "Innovation lies at the heart of leadership and the UK has for generations been looked at as a leader in developing new technologies, processes and ways of thinking. It now risks losing this significantly invaluable trait to other economies which are proactively offering their business communities more support and encouragement to invest in R&D.
"In order for the UK to remain a relevant contender amongst global business hubs, more needs to be done to support its critical mass of MSBs in developing the processes and technologies which strengthen the competitiveness of British businesses. No other segment of the business community is as well placed as the UK's MSBs to deliver cutting edge technologies, innovative ideas and transformative operational processes – all they need is just a bit of extra support and encouragement from the Government to do so. This support could also extend beyond the initial parameters of research and patented technologies, and into the actual manufacturing and development stages to further strengthen the UK economy."
* Produced in partnership with the Centre of Economic and Business Research (CEBR).
** The definition of the mid-sized business (MSB) segment is businesses that typically employ 50-499 people. Grant Thornton refers to them as ‘dynamic organisations’ – as they are focused on improving their own performance in every way: products, procedures, costs, management and structure. MSBs form a crucial part of the country’s employment pattern, often representing a cornerstone of the local economy and an essential prospect for those seeking to enter the workforce.
*** Recent research from think tank million+ ranks the UK 19th amongst OECD countries in terms of private sector R&D investment.