The latest data from the Office of National Statistics shows that the UK spent 1.72 per cent of GDP on research and development in 2012, down from 1.77 per cent in 2011.
This ranks the UK 12th in terms of research and development expenditure in the EU-28 group, behind countries including Slovenia, Estonia and the Czech Republic.
Finland spends the highest proportion of its GDP on research and development at 3.55 per cent, which is more than double that of the UK. The average of all EU-28 countries is 2.06 per cent.
An analysis by the Department of Business, Innovation and Skills, published in January, warned that the UK had a sustained long-term pattern of under-investment in research and development as a proportion of GDP. It said that a “step change” in investment would be needed for the UK to remain a “global leader”.
The Insights from international benchmarking of the UK science and innovation system report found that the USA spends 2.5 per cent of its GDP on research and development. In South Korea the figure is 4 per cent.
According to the latest data, released on 12 March, the proportion of GDP spent on research and development in the UK peaked at 2.14 per cent in 1986. Since 2001 it has fallen to between 1.65 and 1.79 per cent.
In current prices research and development spending fell £0.5 billion, or 2 per cent, to £ billion compared with 2011. When adjusted for inflation the fall is three per cent.
The report, UK Gross Domestic Expenditure on Research and Development, 2012, suggests that the fall is largely down to a drop in investment from the business sector.
Spending in higher education makes up per cent of the total investment at £7.2 billion and increased 1 per cent since 2011 in current prices.
But research council expenditure plummeted 22 per cent in current prices, from £1 billion in 2011 to £0.8 billion in 2012.