New hope for R&D as projects scaled back during pandemic
The economy may be growing, with job vacancies on the up, but new research has shown that nearly half of UK firms scaled back Research & Development during the lockdown.
More worryingly, according to the study, 18 per cent had halted R&D altogether.
The research at the Durham University Business School was undertaken by academics Professor Richard Harris and Dr John Moffat and the results were disappointing, but not surprising, given the constraints of the lockdowns.
The study aimed to discover future research and development plans after finding that 45 per cent of UK business had cut back on projects and a substantial number shutting down research altogether.
It was one of the many studies that looked at how the UK, famed for its R&D expertise had been affected by the pandemic and it centred on 4,500 companies of various sizes and in different sectors of the economy.
After all, British inventions from Jethro Tull and his seed drill, Sir Frank Whittle and the jet engine Christopher Cockerill with the hovercraft to Tim Berners-Lee with the World Wide Web, have led British innovation.
But the future is looking brighter as figures this month from the Office for National Statistics (ONS) show the UK’s GDP has grown and job vacancies have hit a record high with wages rising, while GDP is estimated to have grown by 4.8 per cent in the second quarter of the year.
It should give some hope that investment in the R&D area will grow again, particularly with home working and communications becoming so important for the wider economy. On the plus side, the researchers found 40 per cent of firms had invested to facilitate hybrid and home working.
A press release from Durham University stated that “the results suggest that the Covid-19 pandemic will have long-lasting negative effects on productivity and growth for firms, whilst increased ICT investment reflects the necessity for firms to become more digital.”
Professor Harris said: “The Covid-19 pandemic has had profound effects on the world economy, and in the UK specifically, Bank of England figures suggest that it has led to the largest fall in GDP since 1709. While the short-run effects of the early stages of the pandemic are now well understood, less is known about its implications for growth in the medium to long-term.”
The findings conclude that the pandemic may have longer term consequences as firms make great strides to try to catch up on lost time and opportunities.
For those looking to invest, on its website HMRC says businesses can claim SME R&D relief providing you have a turnover of under 100 million euros or a balance sheet under 86 million euros or you employ fewer than 500 staff.
For more information on tax relief visit ‘Making R&D easier for small companies guide’.
For help and advice on R&D matters contact a member of our expert team today.