How the UK can Nurture Growth through Innovation and Technology

The UK has always been a giant in innovation and technology. Pretty much of the industrial revolution innovations started here. But in today’s world, the UK is somehow lagging behind in areas like artificial intelligence, cloud computing, robotics, Internet-enabled sensors, and genetics. These are the technologies that are expected to drive the next wave of growth in the world’s economy. Indeed, the UK is facing stiff competition from both developed countries like Japan, and middle-income countries like Poland.

Innovation scorecard

The European Union’s Innovation Scorecard puts the UK’s business population’s innovation ahead of the rest of European countries. But small businesses were lagging behind in innovation as compared to small businesses in other European countries. The scorecard reported that an estimated 30% of EU SMEs have introduced a new product, or improved an existing one. For Finland, Belgium, Germany, and the Netherlands, this is 40% of their SMEs. For the UK it is 28%, which places the UK at number 24 out of 34 countries.

This even as a report by Goldman Sachs, the Enterprise Research Centre (ERC) and the British Business Bank (BBB) says that the SME sector will drive about 70% of long-term growth and over 50% of labor productivity.

Innovation and business survival

There is a direct correlation between innovation and business survival. Businesses that are more innovative are able to improve their products to match customer expectations, and also change their business models to match the prevailing conditions in the business environment.

Innovation and exports growth

Innovation is a key driver for promoting exports from the UK. According to the UK’s Trade and Investment Authority, SMEs benefit from higher competition, scaling effects, and learning-by-exporting when they engage in exporting their innovations.

According to the same study, businesses that innovate are 7% more likely to get into the export business than businesses that are non-innovative. They are also likely to grow twice as fast.  There is also a reciprocal benefit in that business that are active exporters are 3 times as likely to innovate a new product in their sector.

With the right support 9-12% more businesses could get into the export business as they possess the profile. This number is more than 120,000 SMEs which could add around £1.15 billion to the UK economy.

Innovation in attracting capital

With equity and venture capital funds assuming a global look, this capital is moving to economies that are innovative. The UK can only attract capital if there are meaningful innovations in the third internet wave of technologies mentioned at the beginning of this article.