Research and development spending

Research and development (R&D) refers to creative and systematic work undertaken to increase the stock of knowledge.

Total R&D

In 2022, the Office for National Statistics changed the methods it uses to produce estimates of R&D spending which led to a substantial increase in the figures. For example, the estimate for R&D spending in 2019 increased from £38.5 billion using the old method to £59.7 billion under the new method.

Using this new method total spending on R&D in 2021 was £66.2 billion.

The government has said this equates to around 2.9% to 3% of GDP, which exceeds its target for total R&D spending to reach 2.4% of GDP by 2027.

This target is discussed further in our briefing on R&D funding policy.

Sectors funding and performing R&D

In 2021, the business sector funded £38.7 billion (59%) and performed £46.9 billion (71%) of R&D in the UK.

The public sector (that is the UK Government, devolved administrations and their respective agencies and the higher education research councils) funded £12.8 billion (19%) and performed £3.4 billion (5%) of R&D.

Higher education institutions funded £5.6 billion (8%) and performed £14.9 billion (25%) of R&D.

Industry breakdown of R&D spending

Of the research funded by the public sector in 2021, 35% went towards the general advancement of knowledge, 21% to health and 13% to defence.

Of the research performed by businesses in 2021, 23% was spent on research into computer programming and software development, 18% on miscellaneous activities, technical testing and analysis, and 17% on chemicals and pharmaceuticals.

R&D spending by region

There are large differences in R&D spending across the UK.

In 2021, R&D performed in London and the East and South East of England was worth £34.4 billion, or 52% of the total. This was £1,406 per person, 42% above the UK average of £987 per person.

At the other end of the spectrum, £534 of R&D was performed per person in Wales, 46% below the UK average.

International comparisons

It is estimated that, in 2020, R&D spending in the UK was equivalent to 2.9% to 3% of GDP.

This was above the OECD and EU average. Among G7 nations, the USA spent the most on R&D (3.47% of GDP) followed by Japan (3.27%) and Germany (3.13%). The UK spent the fourth highest as a share of GDP.

Top R&D performing companies

In the UK, pharmaceuticals company AstraZeneca spent the most on R&D (£6.1 billion in 2021) followed by fellow pharmaceuticals company GSK (£4.7 billion). Banks made up three of the largest ten R&D spenders in the UK.

Globally, the highest spenders were Google’s parent company Alphabet (£24.0 billion), Facebook’s parent company Meta (£18.8 billion) and Microsoft (£18.7 billion).