IOP responds to chancellor’s financial statement
23 September 2022
Key test of government’s commitment to growth will be how far it supports and stimulates investment in research and development, argues IOP.
Responding today to the chancellor, Kwasi Kwarteng’s, financial statement, the group chief executive of the Institute of Physics (IOP) Tom Grinyer said: “If today’s announcements are really going to deliver the sustainable growth the UK economy needs they have to be backed up with proper commitment to invest in research and development (R&D), people and skills.
“In 2019 alone physics-based businesses generated 11% of UK gross domestic product (GDP) and yet the IOP’s R&D Blueprint, published this week, reported that businesses’ difficulties accessing skills, finance and facilities are putting planned increases in R&D investment at risk.
“The government must unlock the resources needed to unleash a new wave of innovation and make sure everyone in every part of the UK can benefit from the societal and economic revolution that science can deliver.”
The IOP has argued in both this week’s R&D Blueprint and previous policy work that there is no way to deliver a high growth future for the UK economy without a proper commitment and plan for investing in R&D.
We have made the case that:
1. Physics is a highly productive sector for the UK economy.
- Our recent Physics and the Economy project has highlighted the huge contribution physics makes to the UK economy and how this has grown across the last decade.
- The IOP and the Centre for Economics and Business Research (CEBR) found that, in 2019 alone, physics directly generated £229bn gross value added (GVA) or 11% of total UK GDP.
- UK physics-based industries employ more than 2.7m full-time employees – accounting for 10% of total UK employment.
- Labour productivity in the sector is strong, at £84,300 per worker, per year.
2. R&D is vital for a thriving modern economy and society. Physics-intensive industries are already a major contributor to UK R&D: enhancing productivity, boosting economic growth and increasing prosperity.
Analysis commissioned by the IOP and conducted by CBI Economics shows that:
- Physics-intensive industries perform one-third of all business-conducted R&D.
- Across the UK, physics-based firms are actively investing in scientific discovery and technology, driven by the goal of developing new products or services and growing their businesses.
- Physics-based firms are looking to the future, with 63% of physics innovators planning to increase investment in R&D/innovation in the five years ahead.
3. Investing in physics-based R&D could generate significant economic returns to the UK.
- Physics-based businesses can accelerate progress towards the UK government’s ambition to spend 2.4% of GDP on R&D by 2027 and increase prosperity.
- Investing an additional £8.8bn in R&D in the UK physics sector would generate a GVA increase of £34.3bn and additional turnover of £52bn.