Research and development spending

Summary

Research and development (R&D) refers to creative and systematic work undertaken to increase the stock of knowledge.

Total R&D

In the UK in 2018, total expenditure on R&D was £37.1 billion, £558 per head, or the equivalent of 1.7% of GDP.

R&D investment has risen steadily over the past few decades, from £20.0 billion in 1986 to the current total of £37.1 billion (in 2018 prices). This is a real terms increase of 94%.

But as a proportion of GDP, R&D expenditure has fallen over this period (it was the equivalent of 19% of GDP in 1986).

The Government has a target for total R&D investment to reach 2.4% of GDP by 2027.

Sectors funding R&D

The business sector is the largest funder of R&D performed in the UK. In 2018, it funded £20.3 billion (55%) of R&D.

Public funding for R&D (government, research councils and the devolved higher education funding councils) was £9.6 billion in 2018, 26% of the total.

Sectors performing R&D

The business sector performed R&D worth £25.0 billion in 2018, 68% of the total.

The public sector (including research councils and devolved higher education) performed £11.2 billion of R&D, 30% of the total.

R&D by region

In 2018, R&D performed in the South East of England was worth £7.0 billion, 19% of the total. R&D performed in the South East, the East of England and London accounted for 53% of all UK R&D. Per head, R&D expenditure in the East of England is the highest: £1064 per head. The figure for the whole UK was £558 per head. In Wales, R&D expenditure is £250 per head.

R&D by sector

In 2019, the pharmaceutical industry performed the most R&D in the UK – worth £4.8 billion. The automotive manufacturing industry performed the second most R&D, worth £3.4 billion.

In 2018, the pharmaceuticals sector employed the most the most people in R&D related roles: 29,000.

International comparisons

The UK R&D expenditure of 1.7% of GDP is below the OECD average of 2.4%.

R&D expenditure in Germany is the equivalent of 3.1% of GDP, in the US it is 2.8% and in France it is 2.2%.

Top R&D performing companies

The world’s top three R&D performing companies are Alphabet (from the USA), which performed €23.2 billion of R&D in 2019, Microsoft (from the USA), which performed €17.2 billion, followed by Huawei (from China), which performed €16.7 billion and, which performed £12.9 billion.