- Innovation Drives Growth
- Businesses that engaged in innovation saw sales growth over three times higher than those that did not (7% vs. 2%).
- This underscores innovation's economic impact and its role in driving business success.
- Decline in Innovation Activity
- Innovation levels in UK firms have declined, especially among small, micro, and non-frontier firms.
- Businesses making product or service changes fell from 61% in 2023 to 56% in 2024, indicating a need for more innovation.
- Financial Barriers Limit Innovation
- Nearly 46% of innovating businesses reported constraints, with the cost-of-doing-business crisis as the top barrier (52%).
- Other barriers include lack of finance (38%), uncertain demand (39%), and lack of government support (40%).
- R&D Investment is Uneven
- In 2024, 39% of UK firms engaged in R&D, with a disparity between firm sizes.
- Large firms (80%) and frontier firms (56%) invest more in R&D than micro businesses (31%).
- External Funding and Support are Underutilized
- 70% of innovators rely on internal funding, but only 12% use R&D tax credits, 10% use grants, and 7% access bank loans.
- Small and micro businesses are less likely to seek external funding despite available financial aid.
- Collaboration is Declining
- In 2024, only 39% of businesses collaborated on innovation, down from 41% in 2023.
- Large and frontier firms are more likely to collaborate than smaller businesses.
- Recruitment Challenges Hinder Innovation
- 33% of businesses reported recruitment difficulties impacting innovation.
- In-demand roles include technicians (27%), graduate-level technicians (23%), and engineers (21%).
- Diversity in Innovation Teams Varies
- Women make up 42% of innovation teams; 19% are from minority ethnic backgrounds.
- Larger firms have more diverse teams, but overall progress in diversity remains a challenge.
- Innovation Breadth is Shrinking
- Firms engaged in an average of 2.2 types of innovation in 2024, down from 2.3 in 2023.
- Declines are notable among micro businesses and non-frontier firms.
- Future Innovation Investment is at Risk
- 47% of firms plan to invest in R&D over the next 12 months, down from 53% in 2023.
- 96% of firms already engaged in innovation plan to maintain or increase R&D spending.
