Fall in UK motor industry R&D spending

Analysis of the latest data from the Office of National Statistics by R&D tax relief specialists Catax shows that R&D spending in the UK motor industry has slumped 9 per cent annually. Total motor sector spending on R&D fell to £3.42bn last year, a decrease of £338m from a record high of £3.75bn registered a year earlier. The industry now employs 22,000 people directly involved in R&D, however, the latest spending figure is a dramatic turnaround from the 4.2 per cent increase seen in 2018.

Uncertainty surrounds what impact the Covid-19 pandemic will have on the level of investment this year, though the motor industry continues to pursue a range of technological advances, not least the rollout of electric cars.

The amount that UK businesses across all sectors have invested in R&D continues to grow, rising 3.3 per cent to £25.9bn but this was the slowest rate of growth since 2012.

The number of people employed by UK businesses to perform R&D also continued to grow, rising 4.4 per cent annually to reach 263,000 full-time equivalents.

Mark Tighe, chief executive of R&D tax relief specialists Catax, said: “The motor industry may have witnessed a dip in R&D spending but there’s no doubt its future is tied to technological innovation, with electric and driverless cars hitting the headlines each and every week.

“It also remains one of the UK’s biggest spenders when it comes to R&D, eclipsed only by the pharmaceutical sector.

“The only headwind to continued robust spending on innovation is presented by this year’s Covid-19 pandemic but such is the dependence of the industry on advances in technology that it’s almost unimaginable that the sector will endure any kind of serious setback.

“Personal modes of transport are likely to be one of the big winners from the fallout of the pandemic, whether that’s electric scooters or family vehicles so there’s every incentive to continue investing in new technology.”