CBI urges UK to avoid loss of up to €1bn a year in EU research funding

Britain’s biggest business lobby group is seeking to prevent the loss of as much as €1bn (£882m) in annual European funding for scientific research and technological development, which has been thrown into doubt by Brexit.

According to a briefing paper seen by the Guardian, the CBI is calling for the government to state its intention to renew its membership of the EU framework programme for research and development after Brexit. Failure to take such steps could further harm businesses already cutting their spending on research and discourage future investments, it says.

“The government has taken good steps so far, but needs to go further,” the document said, calling for Britain to become an “associate member” of the framework programme to protect business investment in the country.

The current European framework, due to be renewed in two years’ time between EU member states and some other nations with associate status such as Turkey and Israel, has pumped about €3.9bn (£3.44bn) into British research projects since 2014. Businesses get about €260m (£230m) of the funding a year, while the rest goes to universities and other research projects.

Since the Brexit vote, British participation in EU framework projects has fallen in the rankings from second to Germany to fifth, amid heightened uncertainty over the UK’s future as a member of the scheme, according to the CBI document. It said uncertainty is “causing businesses to reconsider R&D investment, or move it to other countries”, adding that this would “set back prosperity and regional growth”.

The intervention by the influential lobby group comes after figures from the Office for National Statistics show the UK lagging behind its major European peers for spending on research and development. R&D spending reached a record £33.1bn in 2016, although the UK’s spending was the same as 2015 as a proportion of GDP at 1.67% and it remained ranked 11th in the EU behind nations including France and Slovenia.

The drop-off in spending could help to explain the slow recovery in the productivity levels of British workers since the financial crisis, which has acted to constrain wage growth and the performance of the economy.

In response, the government has created an industrial strategy and promised to increase public spending on R&D to the highest levels in four decades. The UK also this month issued a position paper on the renewal of the EU framework programme, saying it would “actively engage in the development of the programme, including discussing possible options for our future participation”.

The call from the CBI also comes as figures show UK exporters are falling behind their European rivals, as the gradual increase in the value of the pound in recent months makes British goods less competitively priced for international buyers.

Peter Hemington, partner at the accountancy firm BDO, said the UK was the weakest major EU country behind Germany, France, Italy and Spain, which all saw exports expand in the first three months of the year while the UK’s fell back slightly.