The Most Innovative Industries

Which industries are spending the most on research and development?

The most innovative industries are those that are constantly striving to improve and push the boundaries of what is possible. One method of accomplishing this is by funding research and development (R&D), although there is not always a direct correlation between increased R&D spending and growth for companies and sectors, it often benefits those who pursue and fund R&D projects. 

R&D is all about partaking in activities that allow a company to innovate and create new products and services, as well as methods of production and internal structures. The ultimate goal of R&D for most companies is to increase profits, and as such, companies in many sectors pump huge amounts of money into the field every year. 

But which industries spend the most on R&D, and are consequently striving to be the most innovative in the UK each year? By analysing the 50 most popular sectors in the UK, the most innovative industries have been revealed.

Top 5 industries spending the most on R&D

1. Manufacture of motor vehicles, trailers, and semi-trailers: £2.53 billion

The biggest industry in terms of R&D spending is the manufacturing of motor vehicles. In 2019 the companies within the industry collectively spent over £2.5 billion on innovative ideas. Technology such as driverless cars, better electric batteries, and the mass production of hydrogen-powered cars are being currently pursued by the motor industry.

2. Manufacture of other transport activity: £1.98 billion 

It is not just cars that we use to travel around. Manufacturing of other forms of transport spent almost as much as the motor industry on R&D in 2019. In total, £1.98 billion was spent on R&D around improvements to rail and air transport amongst others, and some of this spending fuelled research into the proposed next generation of supersonic airliners. 

3. Architectural and engineering activities: £1.63 billion

The next most innovative industry is architectural and engineering activities. Companies in this sector spent £1.63 billion on R&D, and therefore rank as the fourth biggest spending industry. New architectural ventures, such as sustainable homes, and engineering projects into renewable energy sources, are being well funded as the country attempts to battle the effects of climate change. 

4. Wholesale and retail trade; repair of motor vehicles and motorcycles: £1.32 billion

Retail and wholesale trading is the industry spending the fourth-highest amount on R&D with £1.32 billion in 2019. As the face of shopping adapts to a more digital world, research into new products and services is vital for retail companies to stay afloat in challenging times. In 2018, Amazon opened a supermarket with no checkouts, and since then many retail companies have spent money on developing their own checkout-less methods of shopping.

5. Manufacture of computer, electronic and optical products: £1.26 billion

Only £40,000 behind wholesale and retail trade is the manufacture of computer, electronic and optical products. It’s easy to see that computers play a huge part in our lives today, so it’s no surprise to see that £1.26 billion was spent on R&D in this field.

Industries with the biggest growth in R&D spending over the past five years

1. Advertising and market research

2014 R&D spending: £29 million

2019 R&D spending: £336 million 

Five-year increase in spending: 1058.62%

Advertising and market research companies have seen the biggest increase in R&D spending in a five year period between 2014 and 2019. An increase of over £300 million (or 1059%) in that time period. 

2. Veterinary activities

2014 R&D spending: £2 million

2019 R&D spending: £9 million 

Five-year increase in spending: 350%

The industry with the second-highest growth rate in their R&D expenditure are veterinary companies, although their increase is far less than the marketing sector. In five years R&D spending increased by £7 million (350%).

3. Activities of head offices; management consultancy activities

2014 R&D spending: £112 million

2019 R&D spending: £374 million 

Five-year increase in spending: 233.93%

The third-highest increase in R&D spending, with an increase of 234%, is found in companies making up the activities of head offices and the management consultancy industry. In 2014 this industry spent £112 million, and this increased by £262 million to a total of £374 million by 2019.

Industries with the biggest growth in R&D spending in the 2010s

1. Accommodation and food service activities

2010 R&D spending: £1.9 million

2019 R&D spending: £46 million 

Five-year increase in spending: 2321.05%

When looking at the 2010s as a whole, the biggest increase in R&D spending took place within the accommodation and food services industry, companies in this sector only spent a measly £1.9 million in 2010, but this has grown by over 2300% by 2019 as they now spend £46 million.

2. Advertising and market research

2010 R&D spending: £15 million

2019 R&D spending: £336 million 

Five-year increase in spending: 2140%

We have already seen that advertising and market research companies have had the biggest increase in the past five years, and overall in the 2010s, their spending has increased by 2140% (the second-highest amount of any industry). 

3. Other professional, scientific, and technical activities

2010 R&D spending: £7 million

2019 R&D spending: £106 million 

Five-year increase in spending: 1414.29%

In 2010 other professional, scientific and technical activities companies spent less than £10 million on R&D, whereas in 2019 they were spending over £100 million. This constitutes an increase in spending of over 1,400%.

The companies spending the most on R&D globally

1. Amazon: £16.5 billion

We’ve also taken a look at the specific companies that spend the most on research and development, with Amazon way out in front with an annual expenditure of £16.5 billion. As we all know, Amazon is a giant of a company and always looking forward, as evidenced by this huge R&D spend.

2. Alphabet (Google): £11.8 billion

In second is another tech giant, Alphabet, better known as the holding company that owns Google, with an annual R&D spend of £11.8 billion. Alphabet has its own semi-secret research and development facility called X Development, which produced the Google Glass project and is also currently working on a self-driving car.

3. Volkswagen: £11.5 billion

Not far behind Alphabet is Volkswagen, with an annual spend of £11.5 billion. The VW group encompasses a number of automotive brands and is currently investing in new technologies such as electrification, connectivity and autonomy.

Methodology 

• All data on industry spending was sourced from the office of national statistics’ latest figures. 
• We then calculated the difference and percentage difference between the different years spending amounts on research and development.