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Economic growth

UK Government Boosts Public Investment in Research and Development to Fuel Long-Term Economic Growth

Strategic Insights

— 1 min read

The UK government has reiterated its commitment to driving innovation through increased public investment in research and development (R&D). By 2029-30, the government plans to allocate £22.6 billion towards R&D, supporting eight priority sectors identified in the Industrial Strategy. This strategic investment aims to enhance productivity, living standards, and economic growth. The British Business Bank (BBB) is set to benefit from a two-thirds increase in support for innovative UK businesses, with its financial capacity expanding to £25.6 billion. The BBB will continue to deliver flagship programs such as Start-Up Loans and the Nations and Regions Investment Fund. The government's R&D tax relief scheme, with a 20% rate, stands as the joint highest uncapped headline rate in the G7 for large companies. By 2029-30, the R&D reliefs are expected to support £56 billion of business R&D expenditure annually.

Key Takeaways:

  • The UK government plans to increase public investment in research and development to £22.6 billion per year by 2029-30.
  • This investment aims to support the eight priority sectors identified in the Industrial Strategy, driving long-term economic growth.
  • The British Business Bank's support for innovative UK businesses will increase by two-thirds, with a financial capacity of £25.6 billion.
  • The R&D tax relief scheme, with a 20% rate, remains the joint highest uncapped headline rate in the G7 for large companies.
  • By 2029-30, the R&D reliefs are expected to support £56 billion of business R&D expenditure annually.
  • The government has accepted and implemented all 50 recommendations of the AI Opportunities Action Plan.
  • The Digital and Technologies sector plan sets out a vision for the UK to be one of the best places in the world for fast-growing tech businesses.

Statistics:

  • £22.6 billion: Total public investment in R&D by 2029-30.
  • £25.6 billion: Financial capacity of the British Business Bank by the end of the investment period.
  • £56 billion: Expected annual business R&D expenditure supported by R&D reliefs by 2029-30.
  • 20%: RDEC rate of the R&D tax relief scheme.
  • 50: Number of recommendations accepted and implemented from the AI Opportunities Action Plan.

Sources:

  • "UK Parliament Written Answer" (12 September 2025)
  • "Digital and Technologies Sector Plan" (https://www.gov.uk/government/publications/digital-and-technologies-sector-plan)

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