Cambridge Industrial Innovation Policy

The UK Innovation Report 2023

What makes this report different?

While numerous sources of data on the topic of innovation exist, the UK Innovation Report aims to make a contribution by bringing together, in a single place, innovation and value-added indicators in a concise and accessible format. The report seeks to demonstrate the value of combining different types of indicator and data sets to facilitate policy discussions on innovation and industrial performance – and the interplay between them.

Instead of structuring the report according to input and output indicators, as is typically done in reviews of innovation activity, the focus has been on bringing together indicators that provide rich quantitative representations that are relevant to the vitality of the UK’s innovation activity and its industrial performance in an international context. While the report does not make specific policy recommendations, it does highlight areas where additional evidence and policy action may be required.

Motivation

  • To review the UK’s innovation and industrial performance and compare it with that of other selected countries;
  • To facilitate discussions on the relation between innovation and sectoral competitiveness; and
  • To contribute to the evidence base that is available to inform industrial and innovation policy.

The UK Innovation Report 2022 reported last year a new Innovation Strategy, a new Office for Science and Technology Strategy and a new National Science and Technology Council. This year, the major institutional change has been the ministerial restructure in February 2023.

A new Department for Science, Innovation and Technology (DSIT) was created with the mandate to ensure the UK is “the most innovative economy in the world” and a “science and technology superpower”. DSIT published its Science and Technology Framework in March 2023 which identifies five critical technologies that the UK should focus on to build strategic advantage and commits £250m to ‘technology missions’ in three of them: artificial intelligence, quantum technologies and engineering biology. Among other changes, a new Department for Business and Trade has been created bringing together the business focused functions of the former Department for Business, Energy and Industrial Strategy (BEIS) and the Department for International Trade (DIT).

In November 2022 the Office for National Statistics (ONS) introduced a major revision to the methodology used to estimate R&D expenditure in the UK to give better coverage of smaller businesses, which have accounted for a growing amount of R&D activity.

What is new in this edition of the report?

Against this changing institutional context, the UK Innovation Report 2023 maintains last year’s core policy guiding questions but uses new datasets to address them from different angles. The report uses new indicators and longer time series, integrates additional data sources, and deep dives into different sectors.

  • Section 1 explores how productivity trends vary across UK regions and countries and the role of sector dynamics in these differences.
  • Section 2 analyses the latest data on R&D expenditure in the UK, discussing the implications of recent methodological changes introduced by the ONS.
  • Section 3 focuses on the performance of the aerospace and food & beverages sectors, incorporating insights from consultations with industry experts.
  • Section 4 updates the analysis of UK graduates in science, technology, engineering and mathematics (STEM) comparing the UK with international peers.
  • Section 5 analyses the UK’s economic and innovation performance in the environmental goods and services sector.

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