UK Business R&D Expenditure Shows Promising Rebound
New data from the Office for National Statistics reveals that UK firms increased their research and development spending by 4.5% during 2024, marking a significant turnaround after two consecutive years of decline. The total R&D expenditure reached £55.6 billion, representing an increase of £2.4 billion compared to 2023 figures.
Regional Disparities in Research Investment
While the overall UK picture shows improvement, the regional breakdown reveals substantial inequalities in research funding distribution. Wales recorded R&D expenditure of £884 million, up from £825 million the previous year but still below the £873 million recorded in 2022. More concerning is that this represents just 1.6% of the UK total, significantly lower than Wales's proportional share of the UK business population.
Scotland demonstrated stronger performance with £2.83 billion in R&D investment, accounting for 5.1% of the UK total. Northern Ireland contributed £758 million, representing a 1.4% share. England dominated the landscape with £51.13 billion, making up 91.9% of all UK R&D spending.
The regional analysis shows London leading with 24% (£13.32 billion) of total R&D expenditure, followed by the East of England at 18.5% (£10.3 billion) and the South East at 16.6% (£9.22 billion).
Employment and Sector Analysis
Businesses across the UK employed 518,000 people in R&D activities during the reporting period. Wales accounted for 14,000 of these roles, representing 2.7% of the UK total. Scotland employed 35,000 R&D staff (6.8%), while Northern Ireland had 10,000 (1.9%). London again led in employment with 119,000 people working in research and development, constituting 23% of the national total.
When examining R&D by industry sector, the scientific research and development sector performed the most activity in 2024 at £13 billion (23.5%). This was followed by computer programming, consultancy and related activities at £7.5 billion (13.4%).
Expert Caution on Recovery Sustainability
The National Centre for Universities and Business (NCUB) has cautioned that while the rebound is encouraging, it doesn't yet represent sustained growth. Dr Joe Marshall, chief executive of NCUB, noted that "the recovery is fragile" and that when looking across the full four-year period since 2021, cumulative growth in business R&D remains close to zero.
Dr Marshall emphasized that the 2024 increase largely offsets earlier losses, bringing spending back to 2021 levels. He described the recovery as "an early signal of renewed confidence, not a full turnaround" and stressed that continued commitment from both government and industry will be essential to sustain the momentum.
The NCUB's taskforce on business-led innovation has consistently identified uncertainty, complexity and short-term policy shifts as major factors holding back investment decisions. Dr Marshall concluded that converting this tentative recovery into long-term growth will require "a clearer strategic focus, a simpler system, and greater consistency in the support landscape."
