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Next government must invest in physics to transform the economy, says IOP

5 June 2024

IOP analysis launched today shows the impact of physics on business turnover and makes a powerful case for the general election debate to reflect on crucial role of science in UK’s future.

New figures released by the Institute of Physics (IOP) today shine a fresh light on the massive contribution physics-based businesses are making to the UK’s economy.

A detailed analysis of UK business accounts filed with Companies House, the first of its kind ever conducted into physics, shows companies with a heavy reliance on physics generate a massive £284bn in annual turnover.

The turnover figure comes from 1,633 companies reporting financial results that met strict criteria – organisations where activity would not be possible without the skills, expertise and insights generated by physics.

In total, the companies measured support nearly 800,000 jobs, making up a significant part of the 2.7m jobs supported in part or wholly by physics in the UK economy, as identified in the IOP’s Physics and the Economy report in 2022.

The businesses include and carry out a dazzling range of technologies and processes, from nuclear energy to nanotechnology, and 3D printing to robots and automation.

But IOP-commissioned research has previously found that, despite supporting so many jobs in the economy, significant unmet demand for physics skills exists, with a substantial number of physics-demanding roles vacant at any one time. In mid-2021 there were nearly 9,000 vacancies which could not be filled.

This is impacting employers’ ability to grow and innovate: separate IOP-commissioned research has found that two-thirds of physics-based businesses reported suspending or delaying research and development (R&D)/innovation activities in the past five years due to skills shortages.

The top 10 physics-based companies adding to UK GDP

Registered nameMost recent turnover
Bae Systems PLC£23.08bn
Jaguar Land Rover Limited£20.21bn
Rolls-Royce PLC£16.49bn
British Gas Trading Limited£16.03bn
SKY UK Limited£10.2bn
Drax Power Limited£6.78bn
Vodafone Limited£5.81bn
J.C.B. Service£5.68bn
Telefonica UK Limited£5.66bn
Dyson Technology Limited£5.58bn

Launching the research at the IOP’s annual Celebration of Physics event at Silverstone today, Tom Grinyer, group chief executive, said the figures demonstrate why the parties standing in the general election campaign should be engaging with the challenge of getting the right skills and investment to science innovators.

“The scale of the contribution physics makes to our economy is simply astonishing,” he said.

“Our science underpins so many industrial, manufacturing and processing systems, but too often we take it for granted.

“But we cannot afford to neglect physics. Time and again I speak to physics innovators from some of our biggest employers and they tell me they are desperate for more technical and academic skills in the workforce – more graduates with physics degrees, more apprentices, more technicians, more young people with a physics qualification at any level.

“And although the investment picture has improved in recent years, we still need to do much better if we are going to take advantage of the transformation in our science and society which the green energy transition and technologies such as quantum, AI and fusion promise.

“That’s why today I am calling on all our politicians to support the IOP’s three-point plan for physics.

“We want to see the UK radically increase its investment in R&D – making us match or exceed the level of the highest-spending economies in the Organisation for Economic Co-operation and Development (OECD).

“We believe we must equip more people with the technical skills we need to support our science sector and ensure we have the physics teachers we need in our schools. And we want the barriers in the education system, which still put too many people off studying physics, to be removed.

“If we get this right it can transform our society and economy. Physics can unlock the mysteries of the universe but it can also get the UK working, innovating and growing again – every politician standing for election on 4 July should be engaging with the challenge of placing physics at the heart of our national project.”

The IOP has called on all parties standing for election to commit to its three-point plan for physics.

It has argued for:

  • UK investment in R&D to be the highest in the OECD (reaching the levels set by nations such as Israel at 5.56% of GDP, South Korea 4.81%, and Sweden 3.39%.);
  • more people to be equipped with the technical skills a 21st-century economy requires; and
  • action to tackle the barriers in the education system that prevent too many young people from pursuing physics.

Discover the IOP’s general election hub

How the numbers were arrived at

The IOP used the Beauhurst platform to access accounts details from 4,653 active companies registered in the UK on Companies House.

We took their most recent reported turnover, as captured by Beauhurst, and aggregated it.

Employee counts were either provided in accounts, or estimated based on company size by Beauhurst.

To be included in the overall figures companies had to meet the following criteria:

  • have at least an 80% physics score in our internal modelling;
  • have been nominated for an IOP Business Award;
  • have been spun out from a physics department;
  • fall under a Physics SIC and also have a Physics or Electricity Patent;
  • fall under one of the IOP’s venture capital impact project’s Physics Industries or Buzzwords, and also have an innovation signal (R&D grant, patent, be an academic spinout); and
  • be based in the UK.

Our analysis has excluded large miners, oil and gas players, supermarkets, and banks. Although their turnover is considerable and they often rely on skills drawn from physics, the bulk of their activity is nevertheless still outside of physics innovation activity.