Chancellor urged to back UK research with Budget package worth £50bn to UK output

LONDON – 20 October, 2026 — The Chancellor is being urged to use the Autumn Budget to introduce five tax and fiscal measures that would add £50.1–63.9 billion to UK economic output over the next five years, according to a policy submission published today by BuildResearch and sent to HM Treasury.

BuildResearch is a UK-headquartered global think tank and research-focused management consultancy. Non-scientific R&D and corporate thought leadership remain critical yet undervalued engines of UK productivity. In response to widespread challenges identified by its commercial clients, BuildResearch conducted a holistic national review evaluating how current fiscal incentives drive — or hinder — corporate research investment.

This submission sets out actionable policy proposals to revitalise investment across the UK’s professional services and research ecosystem — a vital sector contributing £95–100 billion annually to the nation’s £3 trillion economy (House of Commons Library estimates).

Three of the five measures work through the tax system rather than new spending programmes, at a cost in forgone revenue rather than departmental budgets. Across the full package the net cost to the Treasury is £22.6–25.3 billion over five years, against £50.1–63.9 billion of cumulative additional output, worth £16.0–21.5 billion a year by Year 5. The two measures requiring direct funding — a £250 million Sovereign Knowledge and AI Insights Fund matched 50/50 by industry, and research vouchers for high-growth SMEs — cost under £600 million net over five years and, modelled over the OBR’s five-year scorecard window, return £9–11 billion.

“In a Budget where every pound is contested, the Chancellor has an unusual opportunity in front of him: growth that returns more than twice what it costs. Considering his tight fiscal headroom, this package offers a pragmatic compromise, leveraging tax mechanisms to deliver three of its five core recommendations. Together they reposition research as a growth engine for every sector of the UK economy, not a cost centre in a handful of laboratories,” said Dr. Ian Selby, Senior Partner: Global Research and Development at BuildResearch.

The submission argues the measures are needed to hold Britain’s place among the world’s top five research economies. The UK spent 2.71% of GDP on research in 2024, a share that fell on the previous year (ONS). China spent 2.69%, up 0.11 percentage points in a single year (China National Bureau of Statistics), and is on course to overtake the UK by the end of 2026, pushing Britain from fifth to sixth in the G20. Germany spends 3.13% and is targeting a rise to 3.5% by 2030 (Destatis); the United States spends approximately 3.4% (US National Science Foundation).

Had the UK matched German or US intensity, it would be investing £12–20 billion more each year. Applying return estimates from research commissioned by the government’s own department — Frontier Economics for the Department for Science, Innovation and Technology — BuildResearch calculates that a decade at that gap implies forgone output in the order of £20–40 billion a year.

One of the measures in this package, a 150% regional research super-deduction for research commissioned outside London and the South East, is designed to redirect research spending away from its current geographic concentration and into the UK’s regions. Some 55% of UK business research and analytical expenditure currently sits in London and the South East.

“International investors back the countries that make research easy to commission and easy to commercialise. By opening up partnerships between universities, growth companies and global consortiums, these proposals ensure the UK remains a magnet for the world’s most ambitious innovators and investors,” said Vinicius Rocha Martins, Founder & Senior Partner, VRM negócios – VRM Invest.

BuildResearch’s modelling projects that the full package would raise UK research intensity from 2.71% to 2.92% by Year 5 — reversing a multi-year decline for the first time and strengthening the UK’s international research position.

NOTES TO EDITORS

Contact: Dr. Ian Selby, [email protected], +44 7930 312939.

BuildResearch is a UK-headquartered global think tank and research-focused management consultancy working with clients across the UK, Europe, the United States and Latin America.

VRM negócios – VRM Invest is a property and urban regeneration investment company based in Brazil, expanding its regional and international operations following the UK–Brazil Strategic Partnership 2026 to 2030, which includes a science, innovation and technology strand.

Repositioning research to be a key component of the UK’s economic infrastructure is available in full (30pp) and as an executive summary (8pp). A supporting literature review is also available. See – www.buildresearch.co.uk

Intensity figures are drawn from ONS, Destatis, the US National Science Foundation and China’s National Bureau of Statistics, and are footnoted in the report. Derivations for the £20–40 billion and £50.1–63.9 billion figures are published in the report’s notes. The £95–100 billion sector estimate is drawn from House of Commons Library data.