R&D spending in the aerospace industry softened 1.9% as the pandemic took hold last year, according to ONS data released on Friday[1].
Annual R&D spending by aerospace businesses in the UK fell £32m to £1.66bn in 2020, hitting a two-year low, analysis by R&D tax relief specialist Catax shows.
The amount the industry spends on R&D has grown relatively slowly over the past decade, rising just 15.2% from £1.4bn in 2010. It has fallen from a record high of £1.9bn in 2016 and now makes up 6.1% of total UK R&D spending.
The sector’s trajectory trails the wider UK trend. Across all sectors, UK R&D spending grew 3.5% last year to a record £26.9bn[2]. This was a rise of 67.9% since 2010.
The number of people employed by all UK businesses in R&D roles also reached a record high last year, climbing 6.8% to 283,000 full-time equivalents — an 83.8% rise since 2010.
The Government has set a target to bring UK R&D spending up to 2.4% of GDP by 2027. It is currently running at 1.7% of GDP according to the latest ONS figures[3].
Mark Tighe, CEO, said: “The aerospace industry has been hit incredibly hard by reduced demand on the consumer travel side of the business during the pandemic but even over the long term, R&D spending has grown at a snail’s pace compared to the wider UK.
“The sector is a relatively big spender in R&D terms, however, and it’s likely the raw expenditure that pours into development of new fuels, engines and aircraft over the next decade will spur a period of sustained growth in these numbers.
“A significant portion of this spending will be earning those companies responsible millions of pounds in R&D tax credits which can be reinvested straight back into R&D.”
1ONS UK Business Enterprise R&D Expenditure 2020, current prices
2ONS UK Business Enterprise R&D Expenditure 2020 report
3ONS GERD 2019
