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Technology companies buck R&D trend

Research and development (R&D) is a valuable element in the business operations of many companies. Whether it's creating the next product or developing IP, the investment is necessary to keep companies moving forward.
Yet many UK companies seemingly fight shy of investing in the future. According to the latest R&D Scoreboard, while global R&D intensity – the percentage of revenues applied to R&D – was found to be 3.6%, UK industry invested just 1.7%. In an attempt to convince them otherwise, this – and the last – Government have created attractive tax breaks.

David Willetts, minister for science and innovation, noted: "We are committed to delivering the most competitive corporate tax regime in Europe and HM Treasury will be consulting business on taxation of intellectual property, R&D tax credits and the proposals contained in James Dyson's review (Ingenious Britain)."
UK technology hardware and equipment developers, however, appear to be bucking the trend – despite the recent economic downturn. The top 72 UK companies in the sector invested more than £1billion in 2009, 2% more than in 2008. Globally, there are 152 technology hardware and equipment companies in the top 1000 R&D investers. Although this group put £59.1bn into R&D in 2009, that was 6.3% less than in 2008.
Yet there is only one technology hardware and equipment developer in the UK's top 25 R&D spenders – Nokia, which increased its investment by 34% to £197million. Bearing in mind the nature of UK industry – dominated as it is by SMEs – we probably should not be surprised.
Not long ago, the Electronics Leadership Council said that UK companies needed to 'innovate or die'. That message remains and R&D is the way forward.

* The R&D Scoreboard has been produced for the last 20 years by the DTI and its successors and has served to point out the relative lack of enthusiasm for R&D amongst UK companies. Now, it has fallen victim to Government spending cuts; this, the 20th edition, is the last.
Whether the R&D Scoreboard continues, the need for R&D certainly does.

Graham Pitcher

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