Investment in innovation is crucial to maintaining the UK’s leading position in fields such as technology, pharmaceuticals and manufacturing. A healthy ecosystem of innovation incentives – including R&D tax relief, patent box and grant funding – underpins this.
With the new Labour government putting growth at the heart of its economic vision, ForrestBrown set out to take the pulse of UK businesses and find out their attitudes to investment.
In collaboration with research consultant, Censuswide, ForrestBrown spoke to leaders of UK businesses nationally. The results offer a fascinating insight into their commitment to investing in innovation – coupled with perceived barriers to investment.
Ongoing commitment to innovation
A key finding from ForrestBrown’s research is that over half of businesses (58%) intend to increase their R&D investment in the next 12 months.
Despite that eagerness to invest in innovation, businesses perceive that a range of barriers are holding them back. A quarter (24%) are concerned about political and economic uncertainty as the main obstacle to future investment, while 19% of businesses surveyed point to a shortage of skilled personnel.
Regulatory and financial constraints were also cited as posing challenges. One in five business leaders (20%) report difficulties in securing funds or accessing external finance as key hurdles to innovation investment, while 23% cite regulatory barriers. 18% identified insufficient financial incentives – specifically R&D tax relief and grants – as the key factor preventing investment in innovation.
Despite the challenges, their commitment to innovation remains strong. Amongst large businesses (ie those with more than 250 employees), nearly three quarters (74%) said they had invested over £200,000 in innovation in the last year, with just under four in ten (39%) spending over £400,000.
Reforms required alongside investment
The research found that 70% of businesses support increased public spending on innovation, signalling that private sector efforts alone may not be enough. However, for this increased investment to be effective, it needs to be coupled with reform. This will create a coherent and attractive framework for investment in the UK, by resolving some of the financial, regulatory and skills-related constraints which many UK businesses encounter.
Reflecting on the findings, Sara Brigden, ForrestBrown Managing Director, said:
“Businesses have a vital role to play in the government’s ‘national mission’ of economic growth, so it’s good news to see so many companies committed to investing in R&D. However, challenges remain, with economic and political certainty creating the most concern.
“The Autumn Budget provides an opportunity to address this issue by creating a stable environment in which innovative businesses can plan and invest with confidence. With the right incentives in place and a long-term commitment from the government to maintain support for business innovation, the full potential of private sector R&D investment can be realised.”
Survey methodology
Censuswide surveyed 502 UK business leaders (director+) of businesses with 10+ employees across architecture, engineering & building, arts & culture, education, finance, healthcare, HR, IT & telecoms, legal, manufacturing & utilities, retail, catering & leisure, sales, media & marketing, and travel & transport sectors on behalf of ForrestBrown. The research took place on 26 and 27 July 2024.
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