UK Innovation stifled by stale economic approach

Published on Monday, 10 September 2012 11:54
Posted by Scott Buckler

The government is not doing enough to create the right climate for innovation investment, say more than two thirds of GB business leaders surveyed..

..who think that too little is being done to give businesses the confidence to invest in new products, services or ways of working. The YouGov findings are released as Nesta, the UK's innovation foundation, publishes its economic plan for innovation-led growth, Plan I.Although 39 per cent of business leaders surveyed believe that business should lead UK innovation, the findings suggest that a lack of innovation leadership is holding back private sector growth. In the last year, a third of businesses invested nothing or less than one per cent of revenue in new products, services or processes; a contributing factor to the £24bn* decline in annual innovation investment since 2008.

Nesta's Plan I sets out 12 recommendations to kick-start sustainable innovation-led growth,  and move beyond the typical economic policy that has dominated in the UK for the last decade. By focusing on structural reform, Plan I bypasses the stale debate between Plan A and Plan B - models that divide GB business leaders; just over a fifth (21%) are in support of austerity a similar number (22%) in support of stimulus.

Geoff Mulgan, chief executive of Nesta, explains, "Economic theory has struggled to understand the world of software and new materials, computing and design, and the continuing debate between Plan A and Plan B has so far said almost nothing about the critical sources of future growth. But there is now broad consensus that innovation is the most important driver of long-term productivity and prosperity - including at least two thirds of UK productivity gains in recent years - and that innovative businesses create more jobs and grow faster.

"The UK has always led the world in innovative businesses, from world class firms like ARM and Rolls Royce to dynamic creative industries.  But Nesta's research shows that we face major problems of finance, structures and culture.

"Plan I argues for a shift in priorities from the present to the future.   It sets out a comprehensive strategy - linking everything from schools to start-ups, big science to infrastructure.  Other countries, such as Israel and Finland understand the importance of innovation and are  investing growing shares of GDP in innovation. The UK can't afford to be left behind."

Plan I outlines how all sectors in the UK - public, private, third sector and higher education - have a critical role to play in restoring economic growth.

With no additional public spending requirements, Plan I makes recommendations that will quadruple the government's discretionary investment in innovation, give the UK the most cutting-edge technological infrastructure in Europe and tear down barriers that discourage businesses from investing.

Broadband is recognised as the most important infrastructure investment for the UK's long term growth by 54 per cent of businesses, followed by energy grids and supplies (48 per cent), rail (48 per cent), roads (43 per cent), housing (41 per cent) and airports (35 per cent).

Source: ©NESTA

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