Manufacturing R&D spending hits record high

The UK manufacturing industry R&D (research and development) spend has hit a record high of £4.4bn in the first quarter — up 6% annually, analysis of the latest ONS data by innovation funding specialist Catax shows.

The ONS published its Q1 2022 statistics for R&D spending last week. Spending on R&D is vital to the UK economy because it helps firms compete for market share, revenue, foreign investment and creates skilled jobs.

The manufacturing industry spent £4,440million on R&D in Q1 2022, up 5.9% from the £4.2bn invested in Q1 2021. R&D spending on a quarterly basis also climbed by 4.7%. The annual increase came despite continued disruption to supply chains and labour markets.

The manufacturing sector’s performance was still worse than UK industry as a whole, however. Total R&D spending by UK businesses rose 14.1% on an annual basis to reach £12bn in Q1 2022. This was a 13.9% quarterly increase.

By comparison, GDP in Q1 was up 8.7% on an annual basis according to the ONS. The ONS R&D spending statistics don’t factor inflation, which was running at an annual 7% in March this year.

Mark Tighe, CEO of Catax, commented: “The manufacturing industry is one of the UK’s biggest spenders on R&D. It’s encouraging to see it hitting new highs at a time when manufacturers would also have been receiving an export boost from a weak pound.

“The fact that this performance comes despite a background of rising costs and labour shortages shows there’s plenty of resilience there to weather any recession.”