New research commissioned by innovation incentives specialist, ForrestBrown, highlights that UK businesses are eager to invest in innovation, but a range of barriers are holding them back.
19% of businesses surveyed point to a shortage of skilled personnel—a concern reinforced by the Learning and Work Institute’s prediction of a 2.5 million shortfall in highly skilled workers by 2030, which is projected to cost the UK £120 billion.
Regulatory and financial constraints also pose challenges. One in five business leaders (20%) report difficulties in securing funds or accessing external finance as key hurdles to innovation investment, while 23% cite regulatory barriers. 18% identified insufficient financial incentives, in the form of R&D tax relief and grants, as the key factor preventing investment in innovation.
Despite these challenges, nearly three quarters (74%) of large businesses[1] said they invested over £200,000 in innovation in the last year, with just under four in ten (39%) spending over £400,000. However, nearly a quarter (24%) of business leaders are concerned about economic and political uncertainty as the main obstacle to future investment.
Reforms required alongside investment
The research found that 70% of businesses support increased public spending on innovation, signalling that private sector efforts alone may not be enough. However, for this increased investment to be effective, it needs to be coupled with decisions and reforms which create a coherent and attractive framework for investment in the UK, by resolving some of the financial, regulatory and skills-related constraints which many UK businesses encounter.
Sara Brigden, Managing Director at ForrestBrown, said:“Businesses have a vital role to play in the government’s ‘national mission’ of economic growth so it’s good news to see so many companies committed to investing in R&D. However, challenges remain, with economic and political certainty creating the most concern.
“The Autumn Budget provides an opportunity to address this issue by creating a stable environment in which innovative businesses can plan and invest with confidence. With the right incentives in place and a long-term commitment from the government to maintain support for business innovation, the full potential of private sector R&D investment can be realised.”