Business and innovation
UK may fall behind without future investment in physics-based industries
28 January 2022
Latest IOP research reveals true value of physics to the UK economy, highlighting need for ongoing support.
A report published by the Institute of Physics (IOP) today shows the huge impact physics has on the UK economy and the importance of ongoing investment and support in the sector.
In The Contribution of Physics to the UK Economy, the IOP 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).
That number rises to £563bn when indirect and induced economic contributions are included. The report also found physics-intensive industries undertake a substantial proportion of UK research and development (R&D), performing one-third of business-conducted R&D.
There are more than 2.7m full-time employees nationwide employed in physics-based industries accounting for 10% of total UK employment, with labour productivity in the sector at £84,300 per worker, per year, up from £79,000 in 2010.
The report (PDF, 882KB) states that 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, creating significant economic returns for the UK.
Stressing the risks of the UK missing out on the economic gain, it highlights the importance of the UK government meeting its target of spending 2.4% of UK GDP on investment in R&D by 2027.
Rachel Youngman, Deputy Chief Executive, IOP, commented: “The figures published reveal the major contribution physics-based businesses bring to the economy, contributing more than other major sectors, powering innovation, and paving the way for productivity and growth.
“The UK must take concrete steps to support the sector and ensure we continue to evolve and invest in physics-based industries, otherwise we risk being left behind.
“The research shows there has never been a better time to enter the physics sector and we need to encourage more people to consider a physics-based career, no matter their background or where they live, whether in industry, in research or in teaching, to inspire the next generation because the demand is clearly there.
“The physics sector is a core pillar of the UK economy, an R&D powerhouse and highly productive, however the UK government must continue to invest in physics-based industries if it is to drive economic growth, support its Covid recovery and build the green, prosperous economy of the future.”
In 2019 alone, the contribution of physics-based business was more than twice the GVA of the construction (£105bn), transport and storage (£98bn), and retail (£77bn) sectors.
Economically, the sector performed strongly with a turnover in 2019 of £634bn – more than double that of the transport and storage, and construction sectors, and £2.5bn greater than retail.
Across the decade turnover increased by £123bn – a 24% rise. The number of physics-based enterprises also continued to grow with 350,135 currently operating in the UK, a rise of 46% compared with 2010.
The IOP worked with the Centre for Economics and Business Research (CEBR) to quantify the contribution of physics-based industries between 2010-2019 on the UK economy.
Owen Good, Head of Economic Advisory, CEBR, added: “The UK’s physics-based industries make a significant contribution to the UK economy. With over 350,000 enterprises in 2019, they generated nearly £230bn in GVA, meaning that over 10p in every £1 of total UK GVA in 2019 was attributable to them.
“Similarly, the physics-based industries directly generated 2.72m full-time equivalent jobs in 2019 – 10% of total UK employment.”
Read the full report and more about the Physics and the Economy project.