Last year's total represented a £1.1 billion increase, with software development emerging as the product group with the largest growth in expenditure on R&D: up £358 million, representing a 34.7 per cent rise.

Employment in the UK R&D sector has increased

Total employment is the sector increased by 7.4 per cent over the year to 231,000 fulltime equivalents - also a record - as London businesses recorded the largest growth in regional R&D expenditure, increasing by £448 million to £2.8 billion, an increase of 19.1 per cent.For the first time, government funding of civilian R&D overtook that on defence, with the former attracting £978 million of taxpayer cash and the latter £820 million.About three-quarters of R&D funding last year came from businesses themselves, while the only decrease in the source of funds coming from overseas, including a decrease in European Commission grants, the ONS said.Pharmaceuticals continued to be the largest product group, accounting for 18 per cent of total expenditure on R&D by UK businesses, followed by motor vehicles and parts group.

Foreigned-owned R&D overtakes that of UK-owned businesses

The data also showed that the proportion of R&D performed by foreign-owned businesses in Britain overtook that of UK-owned businesses at 52.2 per cent against 47.8 per cent.Felicity Burch, innovation director at the Confederation of British Industry, commented, "Business investment in R&D has hit the highest point on record, showing UK firms’ thirst to be world leaders in the products and innovations of the future.“But this spend has not been enough to make a dent in real progress towards the goal of investing three per cent of GDP in R&D. 

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Related articles:

• New government fund earmarks billions for tech R&D 
• May hails boosts to UK's industrial strategy
• Will AI make work more human?

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CBI: the UK government must set out an international strategy

“The UK continues to lag behind the international top tier. In recent months investment intentions have also deteriorated among businesses amid Brexit uncertainty.“There are two things the government can now be doing to push the UK up the international table. At home, it is crucial that the Spending Review sets out a roadmap for delivering on its R&D target."And as Brexit looms, it is imperative that the government sets out an international strategy with clear commitments to maintain the close relationship the UK has with Europe on science and innovation."

Internet of Things (IoT) being used by CIOs

A separate survey from Barclaycard on Thursday showed that chief information officers (CIOs) were driving rapid change in UK businesses by seizing the potential of next-generation technologies.More than four in 10 companies (42 per cent) had increased R&D spending in the past five years, according to the report, with 77 per cent adopting more agile ways of working to enable swifter testing of new approaches.About 30 per cent of CIOs said their businesses were piloting or using Internet of Things (IoT) solutions, with a further 56 per cent planning to implement such projects within the next five years.Keith Little, CIO at Barclaycard, said, “While technology developments like artificial intelligence and the Internet of Things have been the subject of much discussion in recent years, our data shows this isn’t just hype."In fact, many CIOs are already well underway with testing and implementing such technologies to benefit their business. AI and machine learning, for example, are opening up new capabilities to benefit customers, such as fraud detection and customer insights.“Over the next five years, the technology transformation of UK businesses looks set to gather pace as the solutions currently at pilot stage enter mainstream use across organisations. With this in mind, it’s important that CIOs focus on building the skills and expertise of their employees as an ongoing priority.”Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online DirectorySubscribe to Relocate Extra, our monthly newsletter, to get all of the international assignments and global mobility news.

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