Manufacturing R&D spend still too low

Spending on research and development in manufacturing industry increased slightly last year but remained low.

Spending on research and development in manufacturing industry increased slightly last year but remained low, according to figures released this week by the Office for National Statistics.

R&D spending rose by 7% last year, up to £10.1bn when taking into account the pharmaceuticals sector. But Stephen Radley, chief economist at the Engineering Employers’ Federation, said if pharmaceuticals were excluded, R&D spending by manufacturers had only increased by 2.5% since 1992. Last year’s increase would simply make up some lost ground, he said.

‘We are seeing an improvement after several years. But even though things were better last year, the overall performance is still poor,’ he added.

R&D spending in the aerospace industry rose to £1.2bn in 1999, giving it an 11% share of the UK total, while spending in the automotive sector rose from £913m to £1.06bn.

Radley said experience in the US showed tax incentives were very effective at encouraging R&D. He welcomed chancellor Gordon Brown’s recent pre-budget announcement that he would consider extending R&D tax concessions to larger companies.