Business investment in research and development remains steady despite recession

Total expenditure on Research and Development, (R&D), in Northern Ireland, decreased by 2%, (£7.1million) to £344million, in 2008.

This was due to decreases of £7.1million (-4.7%) in Higher Education R&D expenditure and £1.2million (-0.6%) in Business R&D expenditure coupled with an increase of £1.2million (8.2%) in Government expenditure over the year.

Of the £344million spent on R&D, £183.9million (53.5%) was spent by Businesses, £144.2million (41.9%) by the Higher Education sector and the remainder was other Government expenditure.

This is the first time that Business R&D expenditure has fallen since 2003. However, between 2003 and 2008, overall Business R&D expenditure increased by 51.6% in cash terms (from £121.3million to £183.9million).

The Manufacturing sector accounted for the majority (62%) of business R&D activity in 2008. R&D expenditure in the sector rose by 10.2% over the year to £114.3million. In contrast, there was a large decrease in the Services and Other sectors, with R&D expenditure down over the year by 14.4% in cash terms to £69.7million.

Companies with ownership outside Northern Ireland continue to play an important role in financing R&D. Externally owned companies accounted for 60.3% of such expenditure compared to 39.7% by locally owned companies. R&D expenditure by locally owned companies decreased by 9.1% (£7.3million) over the year compared to an increase of 5.9% (£6.1million) by externally-owned companies.

Total SME expenditure fell by £11.1million (-9.5%) from 2007 to 2008, in cash terms. However, since 2003 it has increased by 88.1% to £106.1million.

Northern Ireland is still dependant on a relatively small number of companies for a considerable element of R&D expenditure. The ten biggest spending companies accounted for 41% of the total R&D spend in Northern Ireland in 2008, lower than in 2007 (49%). Small and medium sized enterprises (enterprises with less than 250 employees) accounted for nearly three-fifths (58%) of Business R&D expenditure.

Northern Ireland Businesses accounted for a greater share of total R&D expenditure in 2008 (53.5%) compared to 2003 (46.3%), when Higher Education was the biggest spender (48.8%).

Of the 12 UK regions, seven showed a decrease in in-house business R&D expenditure in cash terms over the period 2007-2008 including Northern Ireland which decreased by 3.6%. This was the third biggest percentage decrease across the UK regions. In-house R&D expenditure for the UK as a whole increased by 1.7% over the year.

In real terms, total R&D expenditure fell by £15.7million (-4.4%). Business R&D expenditure fell by £5.7million (-3.0%), Higher Education R&D expenditure fell by £10.8million (-7.0%) and Government expenditure increased by £0.8million (5.6%) over the year.

Commenting on the figures, Enterprise Minister, Arlene Foster said: “Expenditure on R&D remains business critical, not a luxury that can only be indulged in time of prosperity. While there has been a small decrease of 0.6% in Business R&D in 2008 it is reassuring to note that over the last five years expenditure has increased by 51.6%. Businesses must continue to invest in R&D and recognise that research and innovation are crucial to remaining competitive in the post-recession global economy.”

The Minister continued: “Here in Northern Ireland we have always known that the only way for us to compete and increase our standard of living is to move rapidly into new high-technology, high value-added industries and secure our global reputation for leading the world in key strategic areas of R&D exploitation.

“The suite of actions from Government in response to the first MATRIX report, which I announced last month, will create the space in which industry can continue to drive forward a market-focused R&D agenda.

“It is very important that our indigenous companies, many of whom are SMEs, continue to invest in R&D. These are the companies, especially when working together in new and dynamic collaborative R&D based ventures, which will propel our economy into growth when the upturn finally arrives.”

Notes to editors:

1. For further information – full detailed results are available in the Research & Development Statistics Bulletin, which is available on the following website: http://www.detini.gov.uk/deti-stats-index/stats-surveys/stats-research-development.htm
2. For media enquiries, please contact DETI Press Office on 028 9052 9297. Out of office hours, please contact the Duty Press Officer via pager number 07699 715 440 and your call will be returned.
3. General information on R&D can be obtained from Patrick McVeigh, DETI Statistics Research Branch, on Tel: 028 9052 9606.