While most of the market has its glass half empty in regards to the current UK economic landscape, here’s a story that could be very supportive of growth this year.
The Telegraph report that medium sized firms are set to increase research and development spending this year by 2.8% and that 23% of medium businesses will increase spending in this area.
While it doesn’t look like a massive jump in spending it’s important to bring it into the context of the economy.
Firstly, the changes to GDP workings that came in last September included R&D becoming part of the new calculations.
Secondly, medium sized firms make up the bulk of growth between UK businesses.
UK companies growth 2008-2013
Thirdly, UK medium sized firms accounted for £270bn of the UK economy in 2012, which is larger than the the services and real estate sectors combined. Medium sized companies are also forecasting a quicker rate of turnover growth with revenues expected to rise 6.7% and exports climbing 4.5%. Employment growth is also slated to be higher (2.7%) vs larger firms (1.3%)
Lastly, and a minor point, the EU has a target that 3% of GDP is spent on R&D by 2020
So while an increase of 2.8% in R&D spending doesn’t sound huge, it could have a marked effect on growth, and that’s without whatever SME and large businesses spend as well.
As usual though we’ll need to see expectations turn into real pounds, shillings and pence but it could well be an area worth watching.
The full story from the Telegraph is here.
