EEF blog

As part of our series of summer reading for policymakers, today I’m going to take a look at one of the key drivers for economic growth: innovation.

The UK has some real strengths in innovation. In particular, our scientific and early-stage research is top notch (for example, we outperform many of our main European competitors, including Germany, on international scientific research co-publications and the number of most-cited publications).

The Make it in Great Britain exhibition currently on at the science museum also showcases some excellent examples of British design, innovation and manufacturing which really highlight our ability to compete on the global stage.

However, there are some real challenges for innovation in the UK too.

• For one thing, as I blogged about a couple of weeks ago, our expenditure on R&D lags behind our international competitors.
• But R&D is not all there is to innovation. According to NESTA R&D accounts for only 13% of total spend on intangibles. They say that total spend on innovation is worth about 12% of total private sector GVA. This sounds like good news. But since 2008 business spend on innovation has fallen by £24bn. This fall in innovation spending is equivalent to five times the amount the government spends each year on science and technology research.

Innovation accounted for 63% of productivity growth between 2000 and 2008: it is a key part of sustainable economic growth. But innovation spending is under strain. Back at the emergency budget government made a major commitment to protect the science budget. Do we need to see something similar for innovation?