UK Firms Maintain R&D Spend In Economic Downturn

The UK has cut research, but far less than other countries, says a government report

Research and development spending by the top 1,000 UK R&D investors (the UK1000) dropped only slightly in 2009, in spite of the pressures of the global economic downturn, with R&D cuts by fixed-line telecommunications companies contributing significantly to the drop, according to a new study.

Meanwhile, operating profits soared for both BT and Vodafone in the same period, growing 370 percent and 64 percent respectively, the study noted.

Innovation and competitiveness

The figures come from the Department for Business Innovation and Skills’ (BIS) 2010 R&D Economic Scoreboard, published on Thursday. The report is the 20th and last of its kind, and is due to be terminated as part of wider government spending cuts.

Overall, the UK’s top 1,000 R&D investing companies cut R&D spending by 0.6 percent in 2009 over 2008, to a total of £25.3 billion, the study found. By comparison, R&D spending by top US companies dropped by 5 percent, with cuts of 4 percent for France, 3 percent for Germany and 8 percent for Sweden.

“The Scoreboard case studies demonstrate how innovation enables UK companies to remain competitive,” said David Willets, Minister of State for Science and Innovation, in the report. “Many of our leading companies are well-positioned to seize opportunities as the economic climate improves.”

According to the study, 78 percent of global R&D spending occurs in just five countries: the US, Japan, Germany, France and the UK. The UK ranks fourth in Europe in R&D spending, after Germany, France and Switzerland.

The decline in UK R&D spend was largely due to decreased spending by fixed-line telecommunications firms, as well as those in the banking, aerospace and military sectors. Software and computer services firms were among those to increase their overall R&D spend.

Telecoms R&D spend

Within the UK two pharmaceuticals firms topped the list for R&D spending – GlaxoSmithKline, with £3.6bn, and AstraZeneca, with £2.7bn.

BT was the third-largest, spending £1.03bn on R&D, and Vodafone ranked 15th with £303m. BT and Vodafone accounted for 92.5 percent of the sector’s total R&D investment and 5 percent of overall R&D spending by the UK1000.

Overall, fixed-line and moble telecommunications ranked ninth and 14th in their contributions to R&D spending in the UK in 2009. UK R&D spending in the fixed-line telecoms sector fell by 8 percent, while sales fell by 2.7 percent.

Sage was the largest UK IT company on the R&D list, at 23rd, with £175m.

“In 2009 the software and computer services sector was the third-largest contributor to R&D in the UK1000 and the fourth-largest in the G1000 (the top 1,000 R&D investors globally),” the study found.

“While R&D in the sector fell by 0.4 percent globally, investment increased by 8.6 percent in the UK. This positive growth rate is greater than the pharmaceuticals and biotechnology and aerospace and defence sectors, both ranking higher in terms of overall R&D spend.”