Executive summary (1/3)

1 Structure and performance of the UK economy

 How does productivity vary across UK regions and countries?

 How has the economic structure of the UK regions changed in the last few years?

 Are these changes affecting economic performance?

 Disparities between UK regions and countries are large and widening: in 1999 labour productivity in Wales represented 65% of that observed in London; however, in 2019 Wales’ productivity was only 58% of that of London.

 Regional analysis confirms that in the last two decades, the expansion of service sectors at the expense of higher productivity sectors, such as manufacturing, has slowed overall productivity growth and contributed to widening productivity gaps across the UK.

2 Investment in innovation

 Is the UK spending enough on R&D?

 How do the public and private sectors contribute to national expenditure on innovation?

 How does the UK compare with other countries?

 A new methodology introduced by the Office for National Statistics (ONS) has pushed the estimated UK expenditure on R&D as percentage of GDP for 2019 from 1.7% to 2.7%.

 While this means that the 2.4% target has been achieved, the UK remains well behind countries such as Germany, the United States and South Korea, which invested between 3.2% and 4.6% of GDP on R&D.

 At 0.12% the UK government’s expenditure on R&D in 2019 was still half the OECD average of 0.24%.