R&D investment shrinks

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In 2012, total business research and development (R&D) expenditure in the UK, in current prices, decreased by 2% to £17.1 billion compared with 2011. In constant prices, R&D expenditure decreased by 4% compared with 2011.

The largest decrease in expenditure in 2012 was in Pharmaceuticals which decreased by £727 million (15%), in current prices. Defence R&D expenditure decreased by 10% in 2012 to £1.6 billion. This is partly due to government contracts awarded to UK businesses for the development of aircraft, naval ships, submarines and their systems and equipment moving from the research to production stages. In 2012, expenditure on R&D in the UK by foreign owned businesses constituted 51% of total expenditure. Business R&D expenditure in 2012 represented 1.1% of gross domestic product, a level it has been since 2007. Manufacturing accounts for 72% of total business expenditure on R&D, according to the EEF, the manufacturers' organisation. Steve Radley, director of policy at EEF, said: "Today's data is a clear reminder that the UK has some way to go to catch up with our international competitors. The fall in expenditure does follow a strong increase in 2011, and the latest figures show pockets of strong growth in sectors such as motor vehicles. "However, the key message for government is that it needs to build on the strong policy foundations it has put in place and be ambitious to drive up sustained increases in R&D spending."