• Global Military Communications

UK defence sector R&D spend reaches seven year high at £1.7BN

UK defence sector R&D spend reaches seven year high at £1.7BN

The UK defence sector has increased its annual spend on R&D by 6.3% taking it to a seven-year high, the latest ONS data has revealed.

Defence businesses posted growth in R&D investment of £100m, taking it to £1.7bn, according to the latest statistics for 2018 released last week.

However, this is still some way off the sector’s peak of £2.4bn in 2005, analysis by R&D tax relief specialist Catax shows.

A total of 61% of UK defence R&D spending is funded by the UK Government, the ONS said. The amount of defence R&D funded by the UK Government remained static last year at £1bn but the amount sourced from UK businesses fell 17.9% (£20m) to £92m.

The amount that UK businesses across all sectors have invested in R&D continues to grow, rising £1.4bn to £25bn in 2018 — up 5.8%.

Manufacturing was associated with £16.3bn of R&D spending, up 4.7%, but pharmaceuticals remained the biggest product group with £4.5bn of R&D spending, up 3.3%.

The telecoms sector plotted the largest percentage increase in R&D spending, climbing 25.4% to £947m.

The number of staff employed by UK businesses also continued to grow, rising 7.3% annually to exceed 250,000 full-time equivalents for the first time.

Mark Tighe, chief executive of R&D tax relief specialists Catax, said: “The defence industry is hugely important to the UK and it is encouraging to see strong year-on-year growth in R&D spending.

“However, it has still not returned to its pre-crisis peak and this is what we need to see happening in the next few years if Britain is to continue to breathe life into the export success story that the UK defence industry has always been regarded as.

“More broadly, this is the second full year that Brexit Britain has shrugged off the political poison after the EU referendum and posted great gains in terms of R&D investment, running head and shoulders above the long-term average.

“For the first time in history a quarter of a million people nationwide are engaged full time in keeping the UK at the cutting edge. This is going to make a huge difference to Britain’s prospects outside the EU.

“The rate at which UK businesses are adding R&D staff to the workforce remains impressive, virtually matching the previous year with a rise of 7.3%.”