Skip to content
CityAM
Main navigation
  • News
    • News
      • Latest Business News
      • Economics
      • Politics
      • Tech
      • Banking
      • FTSE 100 Live
      • Retail
      • Insurance
      • Legal
      • Property
      • Transport
      • Markets
    • From our partners
      • AON
      • Bayes Business School
      • Canada BIDs
      • Central London Alliance CIC
      • Destination City
      • Halkin
      • Olympia
      • Inside Saudi
      • Tottenham Hotspur Stadium
      • Santander X
      • YEAR SIX Dividend
    • Featured

      The next person to shop your store may not be a person at all

      AI shopping agents are rewriting the rules of online retail across North America

      Submit a story

      Tell us your story.

      Submit
  • Opinion
  • Sport
    • Latest Sports News
      • Sport
      • Sport Business
    • From our partners
      • The Morning Briefing: SBS x CityAM
      • Aramco Team Series
      • LIV Golf
    • Featured

      Cohere's Aidan Gomez bets the house on 'sovereign AI' with Aleph Alpha merger valuing the group at $20bn

      Cohere CEO Aidan Gomez on stage discussing the Toronto AI lab's strategy

      Submit a story

      Tell us your story.

      Submit
  • Life&Style
    • Life&Style
      • Life&Style
      • Toast the City Awards
      • The Magazine
      • Travel
      • Culture
      • Motoring
      • Wellness
      • The RED BULLETiN
      • Do it with Shared Ownership
      • Media Speak Hub
    • Featured

      Moonvalley's Naeem Talukdar is selling Hollywood the one thing rival AI video tools cannot: legal cover

      Moonvalley's Marey AI video model produces Hollywood-grade footage trained on licensed data

      Submit a story

      Tell us your story.

      Submit
  • Investec
  • Events
  • Latest Paper
Tuesday 03 June 2025 5:29 am  |  Updated:  Monday 02 June 2025 3:39 pm

Don’t forget the arts when it comes to R&D spending

By: Hetan Shah

Add as a preferred source on Google
University students face running out of cash due to lacking financial knowledge
University students face running out of cash due to lacking financial knowledge

The UK’s creative economy is worth more than our life sciences, aerospace and automotive industries combined, says Hetan Shah

UK productivity growth has been woeful since the financial crash and the economy is about a fifth smaller than it would have been had the trend in productivity growth continued after 2007. The Chancellor has a week left before she unveils her Spending Review – the 3-year allocation of funding across government. One of her core missions will be to improve UK productivity to engender an upward spiral of growth and investment.

It is increasingly recognised that investment in research and development (R&D) can be a long term source of productivity through innovation. The expectation is that despite tight budgets, the Chancellor will maintain R&D investment. This is sensible, but given budgetary pressures, how can she get the most bang for her buck? 

One area the UK is traditionally strong is in blue skies research, and investment here should be maintained. Whilst the ideas that come from such research may not seem to have any immediate applications, they can prove fertile in later years – for example theoretical developments in Bayesian statistics from the mid-20th Century which have underpinned today’s developments in artificial intelligence. The vehicles for much of this research – universities – are however under increasing pressure, and there is a need for policymakers to develop a sustainable financial model for them.

The strength of UK SHAPE

We need to optimise R&D for our actual economy, rather than the one we imagine we have. The UK is an 80 per cent services economy with strengths in finance, law, and a creative economy which accounts for around six per cent of the UK’s goods and services and is worth more than our life sciences, aerospace and automotive industries combined. The role and strength of UK social science, humanities and arts (‘SHAPE’) subjects can be underestimated. Between 2013-22, the UK produced the second greatest volume of SHAPE business co-authored publications in the world, only behind the US. Similarly, the UK is the second country in the world in terms of total patent citation size of its SHAPE publications with business co-authorship, only after the US. This all implies investing across a range of R&D disciplines to link to industrial strategy for a services economy.

Policymakers can focus too much on the invention side – the fun toys provided by cutting edge technology – and can underestimate the importance of wider support for the successful translation, commercialisation, adoption and diffusion of innovation. We can learn from other countries here. The Taiwanese Industrial Technology Research Institute has developed tools to ensure diffusion in sectors which traditionally had not picked up technological advancement. In Singapore, innovation policy does not only focus on R&D investment. It takes a pragmatic, whole systems view that includes attention to immigration and visas, legal services, education and infrastructure. If we don’t think in this wider way, we may not get the economic gains that we hope for from scientific advancement.

R&D is a long-term source of prosperity, and an area of UK competitive advantage. The Chancellor would be well advised to keep investing in it through the Spending Review, but to maximise the impact on UK productivity, innovation policy needs to link more strongly with industrial strategy for a services based economy.

 Hetan Shah is chief executive of The British Academy

Read more

Top banks urge Rachel Reeves to expand small business lending scheme

Keanu Reeves in a business meeting setting, engaging with colleagues around a conference table, discussing project strateg...

Share this article

  • Facebook
  • X
  • LinkedIn
  • WhatsApp
  • Email

Similarly tagged content:

Sections

  • Opinion

Categories

  • Opinion

People & Organisations

  • British Academy
  • chancelloir
  • Rachel Reeves

Trending Articles

  • As it happened: FTSE 100 relief rally runs out of steam as BP and Shell weigh; Oil hits three-month low

  • London Tech Week sums up everything wrong with UK tech

  • Rolls-Royce shares surge as SMR unit bags multi-billion pound Swedish nuclear contract

  • KPMG’s Summer Friday half-day rollback signals deeper woes for Big Four giants

  • Inflation expectations at record high in interest rates signal

More from CityAM

  • Top banks urge Rachel Reeves to expand small business lending scheme

    Banking
    Keanu Reeves in a business meeting setting, engaging with colleagues around a conference table, discussing project strateg...
  • ZayZoon, the Calgary fintech born on a fishing boat, posts 1,487% growth as earned wage access goes mainstream

    ZayZoon co-founder Tate Hackert built the Calgary fintech around earned wage access
  • Botpress raises $25m as Quebec's Sylvain Perron pitches his startup as the 'infrastructure layer' for AI agents

    Botpress product UI: the Quebec startup pitches itself as the infrastructure layer for enterprise AI agents
  • Brits aren’t spending enough – time for Splash Out to Help Out

    Opinion
    Burberry has cut its dividend after a plunge in sales.
  • Tony Blair has issued a call to arms – but will Labour listen?

    Opinion
    Tony Blair speaking at a press conference, addressing current political issues and highlighting future strategies.
  • Britain’s £800bn investment pile that isn’t being used

    Opinion
    Traders analyzing data on screens at London Stock Exchange, showcasing investment trends and market activity
  • FluidAI wins US FDA clearance for its surgical monitor as Waterloo's Youssef Helwa targets 100,000 operations

    FluidAI's Origin surgical monitor wins FDA clearance for use in US hospitals
  • King’s Speech: Under Labour, Britain looks like a bad bet

    Opinion
    King delivering an impactful speech at a formal event, addressing a captivated audience, symbolizing leadership and author...
  • Terms & Conditions
  • Privacy Policy
  • Cookie Policy
  • News
  • Markets & Economics
  • Politics
  • Opinion
  • Life&Style
  • Personal Finance

Follow us for breaking news and latest updates

  • Facebook
  • X
  • Instagram
  • LinkedIn
Copyright 2026 CityAM Limited