ONS Finds R&D Spending on UK Telecoms Has Nearly Stalled

The UK Office for National Statistics (ONS) has revealed that the telecoms industry has gone from last year’s report, when it was the fastest growing sector for R&D spending (up 25.4% to total £947m by the end of 2018), to this year (2019) when spending on research and development grew by just 0.95% to total £956m.

At this point it would all too easy to blame COVID-19, except that the latest annual report reflects data from 2019 (pre-pandemic). In fairness, R&D spending does have a long history of yo-yo like movements and in that sense the fact that it hasn’t decreased may actually be seen as a positive, although we’re still a long way from 2008 (i.e. onset of the financial crisis) when it hit £1.4bn.

The UK telecoms industry now employs 10,000 people directly involved in R&D, many of which will need to develop new solutions for the PSTN (analogue phone) migration and to support the on-going rollout of full fibre (FTTP) broadband networks etc.

Mark Tighe, CEO of R&D Tax Specialist Catax, said:

“R&D spending in the telecoms sector has varied much more than in other sectors over the past decade.

It has barely moved in the space of a year and still has some way to go before it recovers to levels seen around the time of the global recession.

The worry now is that Covid-19 disruption will have set the sector back in its recovery but the telecoms sector will have benefited in many ways from the new normal people are experiencing and this gives some hope that a collapse in spending might be avoided.”

Overall, the R&D spend on telecoms accounts for 3.7% of all R&D spending in the UK. Total R&D spending across all industries and sectors came to £25.94bn last year, which is up from £25.12bn in 2018. Sadly, we’ll now have to wait until the end of next year to see what kind of impact COVID-19 is likely to have had.