R&D investment increases companies' share prices, claims UK government

October 22, 2003

Brussels, 21 Oct 2003

Companies which invest heavily in research and development (R&D) do better on the stock market, the latest UK R&D scoreboard has found.

The scoreboard examined data on the UK's biggest R&D investors, and found that the overall share value of the top ten firms had increased by 30 per cent in the last six years in spite of a drop in the stock market index of 15 per cent for the same period.

'The scoreboard confirms again that R&D is the key to economic success. R&D helps create the innovative products and services that UK businesses need to compete on the global stage,' said Lord Sainsbury, Science and Innovation Minister.

The scoreboard compared 700 UK firms and 700 international companies investing in R&D. It found that while the UK invests in R&D above international levels in sectors such as pharmaceuticals and biotechnology, aerospace and defence and health, UK companies fall behind in the largest sectors, namely information technology hardware, and the automotive sector.

Compared with medium sized companies in US, the scoreboard reveals that UK firms of the same size tend to spend less on R&D. 'There are successful UK companies in many sectors investing in R&D at world-class levels, but there needs to be more. That is why the government has taken steps to encourage R&D spending and improve innovation,' claimed Lord Sainsbury.

In an effort to stimulate further investment in R&D, the UK government has recently simplified the tax credit system so that companies of all sizes are eligible. '[Tax credits] can make an enormous difference to business, and I strongly urge everyone to take advantage of the credits. We invest heavily in our science base and encourage business to turn this cutting edge research into economic success,' said Lord Sainsbury.

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CORDIS RTD-NEWS / © European Communities

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