In 2014, the gross domestic expenditure on research and development (R&D) performed in the UK, in current prices, increased by 5% to £30.6 billion compared with £29.3 billion in 2013.
In 2014, total gross domestic expenditure on R&D performed in the UK, in constant prices, increased by 3% compared with £29.7 billion in 2013.
In constant prices, R&D expenditure increased by 45% from the 1990 estimate of £21.1 billion. Expenditure reached an all time high of £30.6 billion in 2014.
The business sector accounted for £19.9 billion of expenditure in 2014, representing 65% of total expenditure on R&D performed in the UK. This is an increase of 6% in current prices from £18.8 billion in 2013.
Total R&D expenditure in the UK in 2014 represented 1.67% of Gross Domestic Product (GDP), unchanged from 2013. This was below the European Union (EU-28) provisional estimate of 2.03% of GDP, but the 11th highest of all member countries.Back to table of contents
This release provides estimates of R&D performed in and funded by the following 4 sectors of the UK economy, as defined in the Frascati Manual (2002):
- Business Enterprise (BERD)
- Higher Education (HERD)
- Government, which includes Research Councils (GovERD)
- Private Non-Profit organisations (PNP)
All these sectors’ R&D data are known collectively as gross domestic expenditure on R&D (GERD).
GERD is unique in providing this information and is the preferred measure of R&D activity for use in international comparisons. This release reports on R&D expenditure in the UK irrespective of the country of residence of the ultimate owner or users of the R&D produced. The main purpose of collecting R&D data from all sectors of the economy is to supply data for policy and monitoring purposes on science and technology, of which R&D is an important part.
R&D is defined as “creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society and the use of this stock of knowledge to devise new applications”. The statistics are produced according to internationally agreed standards defined by the Organisation for Economic Cooperation and Development (OECD), as published in the Frascati Manual (2002).
In this release, R&D is measured by the expenditure on R&D performed by an organisation, or the funding received by an organisation for R&D work. These are often but not always the same. R&D performed is regarded as a more accurate measure than funding received by an organisation, as not all funds received may be used on R&D as intended. Our surveys therefore measure expenditure on R&D performed by 4 sectors of the economy and how this expenditure is funded.
The business sector is the largest component of GERD; its estimates in this release are derived from the Business Enterprise Research and Development (BERD) survey, published on 20 November 2015 in the Business Enterprise Research and Development 2014 statistical bulletin. Approximately 5,500 UK businesses were selected for this survey from a continually updated register of R&D performers.
Notes for overview
The National Accounts provide the framework that is used to define and measure the UK’s economic performance, such as the value of the UK’s GDP. Changes to the European System of Accounts (ESA) meant that from September 2014 onwards, expenditure on R&D contributed to the formation of assets and therefore the value of the UK economy. Further information about this important change can be found at ONS ESA 2010.
Please note an updated Frascati Manual (2015) was introduced in October 2015 which improved the definitions and explanations of R&D.
The GDP measure used is non-seasonally adjusted money GDP (BKTL) from 1955-56 to 2014-15 (1955 to 2014) consistent with United Kingdom Economic Accounts Q3 2015 published on 23rd December 2015.
We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have, and would be particularly interested in knowing how you make use of these data to inform your work. Please contact us via email: RandD@ons.gsi.gov.uk or telephone Cecil Prescott on +44 (0)1633 456767.Back to table of contents
Expenditure on R&D performed in the UK reached £30.6 billion in 2014 in current prices, up from £29.3 billion in 2013 and £11.8 billion in 1990. R&D expenditure increased by 5% since 2013, while the average annual growth rate since 1990 was 4.1%.
In constant prices, which have been adjusted to remove the effects of inflation, the value of R&D expenditure in 2014 (£30.6 billion) reached its highest level on record, surpassing 2013’s high by £0.9 billion, which represented an increase of 3%. With an average annual growth rate of 1.6% since the 1990 level (£21.1 billion), a long-term upward trend, in constant prices, is still evident (Figure 1).
Figure 2 shows UK gross domestic expenditure on R&D performed in the UK, as a percentage of GDP. Total R&D expenditure in 2014 represented 1.67% of GDP, unchanged from the 2013 estimate. UK gross domestic R&D expenditure, as a percentage of GDP, declined steadily between 1990 and 1997. Since 1998, the level has fluctuated between 1.59% and 1.73% with an average estimate of 1.67% for the period 1998 to 2014.
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UK estimates of R&D cover the 4 sectors of the economy, namely Business, Higher Education, Government (including Research Councils) and Private Non-Profit organisations. Figure 3 shows the contribution each sector made to the total UK R&D expenditure estimate in 2014.
The business sector performs the most R&D of any sector in the UK. In 2014 it accounted for £19.9 billion of expenditure, representing 65% of total expenditure on R&D performed in the UK. This is an increase of 6% in current prices from £18.8 billion in 2013.
On an annual basis, the 400 largest business R&D performers are asked to select the industry product groups that best describe the type of R&D they undertake. For the smaller R&D performers, no product group data were collected, however, these businesses’ dominant Standard Industrial Classification (SIC) is used as a proxy to determine product group (background note 4). The product groups with the largest R&D expenditure in 2014 (Figure 4) were:
- Pharmaceuticals (£3.9 billion)
- Computer programming and information service activities (£2.4 billion)
- Motor vehicles and parts (£2.3 billion)
- Aerospace (£1.7 billion)
- Miscellaneous business activities (£1.4 billion)
- Machinery and equipment (£1.0 billion)
- Telecommunications (£1.0 billion)
The UK government has continued to promote growth in R&D, particularly in the business sector, through tax relief and Catapult centres. A Catapult is a “technology and innovation centre where UK businesses, scientists and engineers can work together on research and development, transforming ideas into new products and services”.
More detailed information on business R&D expenditure can be found in the Business Enterprise Research and Development 2014 statistical bulletin published on 20 November 2015.
The higher education sector, which includes universities and higher education institutes, represented 26% of total UK R&D expenditure in 2014 at £7.9 billion. This is an increase of 3% in current prices from £7.6 billion in 2013. The funding for this sector is mainly provided by the Higher Education Funding Councils for England, Scotland and Wales, the Department for Employment and Learning in Northern Ireland and the 7 UK research councils.
Government and research councils
The UK government owns many research institutes and laboratories that carry out R&D. These are managed by different government departments, including the Department for Business, Innovation and Skills, the Department for Environment, Food and Rural Affairs and the Department of Health.
In 2014, R&D expenditure in the UK performed by the government and research councils sector decreased by 5% in current prices, from £2.3 billion in 2013 to £2.2 billion in 2014. This sector accounted for 7% of total expenditure on R&D performed in the UK in 2014.
Research Councils UK (RCUK) is the strategic partnership of the UK's 7 research councils. Each year the councils perform research covering the full spectrum of academic disciplines from the medical and biological sciences to the arts and humanities.
Research councils’ R&D expenditure increased by 1% in current prices, from £814 million in 2013 to £821 million in 2014.
Private non-profit organisations
The private non-profit (PNP) sector includes registered charities and trusts. Those performing R&D specialise in mainly health and medical research. Some of the largest of these are based in the UK. This sector includes, for example, a number of cancer charities that carry out extensive research into types of cancer prevention, from drug development to clinical trials.
The private non-profit sector is the smallest R&D performing sector in the UK. In 2014, it is estimated that expenditure on R&D performed by these organisations was £0.6 billion, which contributed 2% to total UK R&D expenditure. However, this sector did see the largest overall increase in percentage terms, up 7% in current prices from 2013. This is mainly attributable to reclassification of an organisation to the private non-profit sector in 2014. It should also be noted that the PNP survey is biennial and therefore the 2014 results are estimated.Back to table of contents
Expenditure on R&D, performed for civil purposes in 2014 (£28.8 billion) accounted for 94% of total UK R&D expenditure (Figure 5).
In current prices, civil R&D expenditure increased by 5%, from £27.4 billion in 2013 to £28.8 billion in 2014. However, defence R&D expenditure decreased by 6%, from £1.9 billion in 2013 to £1.8 billion in 2014.
In constant prices, civil R&D expenditure has increased by 76% (£12.4 billion) since the 1990 estimate of £16.4 billion. In contrast, defence R&D expenditure decreased by 63% over the same period, from £4.7 billion in 1990.
Civil and defence R&D expenditure can be further split between the 4 performing sectors. The business sector was by far the largest R&D performer in both civil and defence R&D in 2014, at £18.4 billion and £1.6 billion respectively.
Of particular note, business R&D expenditure in the civil sector has increased by 63% in constant prices since 1990, but business expenditure on R&D in the defence sector has decreased by 50% over the same period.Back to table of contents
In 2014, the largest funder of R&D performed in the UK was the business sector which funded £14.7 billion; 48% of total UK performed R&D. This was an increase of 8%, in current prices, from £13.6 billion in 2013 (Figure 6).
Whilst the government and research councils sector spent £2.2 billion performing R&D within their UK public research institutes, they actually funded £6.3 billion of UK R&D performance, 21% of total funding. Research Councils UK (RCUK) offers individuals and businesses overseas, access to the UK’s research facilities and infrastructure.
In just over 2 decades, there has been a change in the profile of how UK R&D expenditure has been funded. In 1990, £1.4 billion (12%) in current prices of R&D funding came from overseas. Since then, there has been a steady increase in the value of funding for UK R&D expenditure from overseas, from £2.3 billion (16%) in 1996 to £5.4 billion (18%) in 2014. Funding of R&D from overseas increased by 2% since 2013, while the average annual growth rate since 1990 was 5.8%.
Figure 7 is a representation of the flows of R&D funding from the 4 UK sectors and overseas. The values in the boxes are the amounts of funding that each sector provided to the other sectors in the UK during 2014. The arrows indicate the values provided to the recipient performing sector.
It is important to note that sectors can fund themselves. For example, in 2014 the business sector performed £19.9 billion, of which £14.1 billion was funded by the sector itself. The remaining £5.9 billion of R&D expenditure performed by businesses was funded by other sectors and overseas.
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The largest funder of civil R&D performed in the UK was the business sector (£14.3 billion), 50% of total civil funding.
Of the £5.4 billion funding received from overseas in 2014, 97% was performed on civil R&D (£5.2 billion).
R&D expenditure in the UK for defence purposes accounted for 6% of total R&D expenditure (£1.8 billion) in 2014. The UK government’s funding of defence R&D in 2014 was £1.2 billion (69% of total defence funding). This remained unchanged in current prices from £1.2 billion in 2013, although the proportion of total defence funding from the government sector increased from 66% in 2013. This includes government contracts awarded to UK businesses for the development of aircraft, naval ships, submarines and their systems and equipment. The business sector provided £0.4 billion (22%) of funding and £0.2 billion (9%) came from overseas.Back to table of contents
R&D expenditure can be analysed by UK country and region (Figure 8). In this context, the country and region refers to the location where the R&D is performed, not the location of the funder.
In 2014, the South East and East of England continued to dominate R&D activity in the UK. These regions together accounted for 39% of total UK R&D expenditure (£11.9 billion).
The majority of UK R&D expenditure was carried out in England (£27.1 billion) in 2014, an increase of 5% in current prices from £25.8 billion in 2013. Wales and Scotland showed increases of 4% and 1% respectively in 2014. Northern Ireland however, showed a decrease of 14% from the 2013 estimate of £0.6 billion to £0.5 billion in 2014. This is attributable to a decrease in R&D performed in the business sector within Northern Ireland.
It is interesting to note that while business is the dominant sector throughout the majority of the UK, there are 2 areas where the higher education sector was the highest. In London and Scotland the higher education sector had the largest expenditure on performing R&D, with spends of £1.9 billion and £1.1 billion respectively. This pattern has been evident for some time, but now in 2014 the gap between higher education and business has reduced to its lowest level in recent years.
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Europe 2020 targets specify 5 targets for the European Union (EU) to achieve by 2020, including a target of 3% of the EU’s GDP to be invested in R&D. Therefore, the estimates in this release are essential in monitoring progress towards this target.
The percentage of R&D to GDP increased marginally in the EU-28 up to 2002, reaching a high of 1.81%, before declining slightly through to 2005 (1.76%), and then climbing again to an estimated 2.03% in 2014 (Figure 9). Please note that the 2014 results for the EU-28 and OECD countries are early estimates and are provisional at the time of this release.
Figure 10 shows the latest available 2014 estimates as a means of placing the UK into an international context with regards to GERD as a percentage of GDP. It shows the individual EU-28 countries’ GERD as a percentage of GDP, as well as the average for the EU-28, compared with the Europe 2020 target of 3%. The UK’s GERD represented 1.67% of GDP in 2014, unchanged from 2013. The UK however, has moved up a place to 11th highest GERD as a percentage of GDP of all EU-28 countries, where the average was 2.03% of GDP.
The latest Eurostat estimates of GERD indicate that the increase in the EU GERD as a percentage of GDP that began in 2011 continued into 2014. Preliminary estimates produced by Eurostat indicate an overall increase in the EU-28 value of GERD as a percentage of GDP, from 1.97% in 2011 to 2.03% in 2014.
When comparing total business R&D intensity across countries, it is important to take into account differences in individual countries’ industrial structures. OECD has produced a Science, Technology and Industry Scoreboard to facilitate these comparisons.Back to table of contents
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