Business and innovation
The contribution of physics to the UK economy
28 January 2022
Physics is a leading force behind innovation and R&D. But the UK government must enhance support for our industries now to address skills shortages, boost the economy and drive the green revolution, writes Rachel Youngman.
This week the Institute of Physics (IOP) has published its latest report into the impact physics has on the UK economy and our work now is to make sure its findings keep the crucial importance of investment in our science high up the agendas of decision-makers in business and politics.
Whether through delivering ground-breaking research or in advancing technologies, physics is a leading force for driving business and innovation on a grand scale and today’s report The Contribution of Physics to the UK Economy, part of the Physics and the Economy project, paints a picture of just how far and deep its impact goes.
Investing in physics-based industries makes economic sense and our research shows exactly how.
We measured the performance and growth of the sector between 2010-2019 and found that, in 2019 alone, physics directly generated £229bn gross value added (GVA) or 11% of total UK gross domestic product (GDP). An astonishing number, which rises even more vertiginously to £563bn when indirect and induced economic contributions are included.
Physics-intensive industries undertake a substantial proportion of UK research and development (R&D) too, performing one-third of business-conducted R&D in total. The research shows how putting an extra £8.8bn into R&D in the physics sector in the UK would generate a GVA increase of £34.3bn and an additional turnover of £52bn, which would clearly bring significant economic benefits to the UK.
We must ensure those with the decision-making power fully understand the contribution a strong and connected physics business community brings to the wider economy, and how vital a well-funded, thriving R&D base is to the discovery and solutions process in driving that same economic success.
"With more than 2.7m full-time employees nationwide employed in physics-based industries and labour productivity in the sector at £84,300 per worker, per year, the returns on investment can only improve."
Taking employment figures into account, with more than 2.7m full-time employees nationwide employed in physics-based industries accounting for 10% of total UK employment and labour productivity in the sector at £84,300 per worker, per year, up from £79,000 since 2010, the returns on investment can only improve. However, as our report Unlocking the Potential of Physics Skills in the UK and Ireland shows, whilst there has never been a better time to enter the physics sector, we have a skills shortage.
We must encourage more people to consider a physics-based career, no matter their background or where they live, and invest into a world-class education and technical training system including the recruitment and retention of specialist physics teachers.
Our report shows the major contribution physics-based businesses bring to the economy, contributing more than other major sectors, including retail and construction. In 2019, the contribution of physics-based businesses was more than twice the GVA of the construction (£105bn), transport and storage (£98bn), and retail (£77bn) sectors.
The future holds promise, but the UK must continue to drive physics innovation and pave the way for productivity and growth, so we don’t get left behind. This is a real concern, and we must keep the momentum going.
The physics sector is a core pillar of the UK economy and an R&D powerhouse – we are calling on the UK government to continue to invest in and support physics-based industries and the ecosystem around them if we are to drive economic growth, bounce back from Covid and build the green, prosperous economy the UK desperately wants and needs.
Rachel Youngman, Deputy Chief Executive, Institute of Physics