A leading economic think tank has highlighted the importance of encouraging private sector research and development (R&D) and has said that improving the availability of finance will be crucial to sustaining the recovery and rebalancing of the UK economy.
The research is the subject of a forthcoming report by the Centre for Economics and Business Research (CEBR), commissioned by SMMT, which will highlight key factors set to influence the country’s ability to achieve sustained economic recovery.
Findings of the report were previewed at the first meeting of the new All-Party Parliamentary Motor Group where SMMT urged government to prioritise measures that encourage private investment in Research and Development (R&D) in next month’s Comprehensive Spending Review.
In the report, CEBR stresses that current lending to businesses and consumers is well below the level required to secure sustainable growth and that during the credit crunch, lending to manufacturers reduced significantly. With this in mind, the parliamentary briefing emphasised the importance of securing more and better priced finance for businesses and consumers and focused on the role that UK automotive can play in delivering the low carbon revolution.
CEBR chief executive, Douglas McWilliams, said, “Productivity growth is the most important determinant of the pace of economic recovery and innovation, through R&D, plays a highly important role in enhancing that productivity. Within the next five to ten years, the automotive industry could easily become the UK’s second largest sector for R&D expenditure, but government assistance is required to ensure good access to affordable finance.”
CEBR reinforced the need for government to work closely with industry to make best use of its limited resources. As an integrated group of politicians and industry leaders, the Automotive Council is already making good headway in promoting the value of the UK as a base for investment. However, in order to capitalise on UK skills and the low carbon opportunity, industry needs government to use the October spending review to boost business and consumer confidence through carefully selected measures.
“Industry needs clarity from government on how it will reform the tax credit system to enable R&D, innovation and growth,” said Paul Everitt, SMMT chief executive. “UK automotive has the potential to be at the heart of a global low carbon revolution that will encompass current and future technologies and fuels.”