Research and analysis

Research and development: macroeconomic modelling of 2.4% target

Macroeconomic assessment of the potential future impacts of increasing R&D expenditure in the UK on GDP, employment and productivity.

• From: Department for Energy Security and Net Zero and Department for Business, Energy & Industrial Strategy
• Published: 1 July 2020

Documents

Macroeconomic modelling of 2.4% R&D target: analysis with the E3ME model

Ref: BEIS Research Paper Number 2020/009

PDF, 1.13 MB, 62 pages

Details

This report assesses the potential future impacts of increasing R&D expenditure in the UK, drawing on the E3ME macroeconomic model maintained by Cambridge Econometrics. Specifically, it considers the impacts on GDP, employment and productivity of meeting a target in which the share of R&D expenditure in GDP increases to 2.4% by 2027, compared to a current rate of around 1.7%.

It also includes:

• an assessment of different ways in which the R&D target might be met, including different weightings of expenditure across sectors and in different parts of the country
• possible funding measures for additional R&D
• estimates of the impacts of 2 specific technologies on the UK economy, digitalisation and the electrification of transport

The report was commissioned by BEIS and carried out by Cambridge Econometrics Ltd.