Total spending on research and development in Britain declined 2% in real terms between 1995 and 1996 according to official figures out last week.
The R&D spending as a proportion of gross domestic product also fell for the third year, to 1.94%.
OECD figures show that the UK is the only large industrialised country where R&D spending as a percentage of GDP has fallen over the past 15 years.
Gross domestic spending on R&D in 1996 is estimated at £14.3bn, compared to £14.2bn in 1995. Spending on civil projects was £12.3bn, while that for military R&D was £2.1bn.
A third of research funding is paid for by Government, research councils and higher education funding councils. Their contribution in real terms fell in 1996.
Spending on R&D from businesses remained constant at £6.7bn.