Recommendation 3

The Department has not yet made clear how it will make sure the UK will meet the target to spend 2.4% of its GDP on R&D by 2027. The government has a target to 6 Industrial Strategy Challenge Fund increase the UK’s public and private investment in R&D to 2.4% of GDP by 2027. In 2018, the latest year for which data are available, the UK spent £37 billion on R&D, the equivalent of 1.7% of its GDP. This is well below the Organisation for Economic Cooperation and Development’s average of 2.4%, and the level achieved by other OECD countries. Germany for example spent 2.9% of its GDP on R&D in 2018. In 2019, the Department announced that to achieve government’s target of 2.4%, both public and private R&D investment would need to rise to around £60 billion each year. The government has committed to increasing public investment in R&D to £22 billion by 2021–25. UKRI asserts that meeting the target is challenging but plausible. The recent impact of COVID-19 on the economy may make prioritising the public investment required to meet the target even more challenging. Recommendation: The Department should develop, and then publish, by October 2021, its plan setting out the steps it will take to meet the 2.4% spending target by