R&D Spending In UK Manufacturing Sector Rose 4.4% Last Year Despite The Pandemic

Phil Black - PII Editor 24/04/2021

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Manufacturing sector R&D spending hit £15.3bn last year, according to latest ONS data

R&D spending in the manufacturing industry defied expectations with a 4.4% rise last year despite the pandemic, analysis of latest ONS data by business tax relief consultancy Catax shows¹.

The industry spent £15.3bn on R&D in 2020, up from £14.6bn invested in 2019. The increase came despite widespread disruption caused by the Covid-19 pandemic, which had led to fears that levels of innovation could suffer.

It also represents a record high. Over the past decade, R&D spending in the manufacturing sector has grown 104.5%, up from £7.5bn in 2010.

The ONS published its Q4 statistics for R&D spending yesterday (Wed) providing a full year picture for different industries.

The manufacturing sector’s performance was slightly worse than the performance of UK industry as a whole. Total R&D spending by UK businesses rose 5.09% to £38.4bn last year.

UK GDP in 2020 was 9.8% down on an annual basis according to the ONS² — the worst performance since 1709.

Mark Tighe, CEO of R&D tax relief consultancy Catax, comments:

“The pandemic stopped businesses in their tracks but those reliant on innovation clearly didn’t take their foot off the gas.
“Manufacturers, like all sectors, suffered major disruption last year so it’s hugely encouraging that the industry still managed to grow its R&D spend on an annual basis. This will put the sector on a strong footing as the economic recovery gains pace.”