UK prioritises investment in innovation

UK Chancellor Philip Hammond used his Autumn Statement to prioritise high-value investment in innovation and infrastructure in an effort to raise the country’s productivity.

Hammond declared the UK’s productivity gap a “shocking” long-term weakness, noting that the country lags around 30 percentage points behind the US and Germany. This means it takes a German worker four days to produce what a British worker manages in five, he explained.

“Raising productivity is essential for the high-wage, high-skill economy that will deliver higher living standards for working people.”

Hammond announced the formation of a new National Productivity Investment Fund that will provide £23bn (US$28.5bn) of investment in innovation and infrastructure over the next five years.

“We do not invest enough in research, development and innovation,” he said. “As the pace of technology advances and competition from the rest of the world increases, we must build on our strengths in science and tech innovation to ensure the next generation of discoveries is made, developed and produced in Britain.”

This new fund will include an extra £2bn a year for investment in R&D, as outlined earlier this week by Prime Minister Theresa May at a speech to business leaders. This will be used to help put post-Brexit Britain at the cutting edge of science and technology including biotechnology and artificial intelligence.

“Our task now is to prepare our economy to be resilient as we exit the EU,” Hammond said, “and match-fit for the transition that will follow.”

May’s speech outlined a series of strategic measures aimed at boosting industry and innovation.

The Prime Minister announced there will be a consultation later this year on the development of a national industry strategy. She also said a panel has been created to advise the government how it can ensure more promising UK innovations are developed at home rather than abroad.

Hammond offered some specifics on investments set to boost other engineering sectors including £1bn for fibre broadband and trialling 5G networks; £390m for future transport technologies including testing driverless cars and installing more charging points for electric cars; and £2.3bn for new housing.

EEF CEO Terry Scuoler said the Autumn Statement helped “calm the nerves with the right level of pre-Brexit tonic” and “provided industry with a down payment on a modern industrial strategy.”