Week 37, 2012: Government Spending on R&D

Summary: This week, Nesta published a report called Plan I, pointing to the lack of funding for research and development in the UK. This week's chart is an extended version of a graph included in the report, showing how government spending on R&D has changed since the recession hit.

What does the chart show? The chart shows total government budget appropriations or outlays on research and development as a proportion of total GDP for a selected number of countries, indexed so that the 2007 figure is equal to 100. This does not show total proportion of GDP spent on R&D, but rather shows how this spending has changed over time. 2010 is the latest figure available for all countries, and in some cases is an official estimate rather than the final figure.

Why is the chart interesting? The UK is currently spending less as a proportion of its GDP than it has at any other point since 2000. In contrast, our closest competitors are spending far more than they did in 2007, before the crisis hit.

Not only is the trend bad, but the UK government also spends less as a proportion of GDP than any of the other countries listed. Total budget appropriations or outlays was 0.63% of GDP in 2010 according to the OECD, compared to 0.74% in Japan (the next lowest) and 1.03% in the USA (the biggest proportion out of the six listed countries). Nesta's report quite rightly points out that as private businesses have cut back on investment in innovation as a result of the recession, the UK government has failed to step into the gap, and that has left us worryingly short on research spending.

The Chart of the Week is moving to Wednesdays instead of Fridays, and as a result the next chart will be published on the 26th September.