Businesses set to innovate out of looming recession
With many experts predicting that the UK economy is on course to enter a recession before the end of the year, research from ForrestBrown, the UK’s leading R&D tax credit consultancy, has found that businesses will turn to innovation to weather the economic downturn.
According to a recent survey by ForrestBrown, over a half (55%) of chief innovation officers in a range of sectors anticipate that they will increase their investment in innovation if a recession occurs in the next six to twelve months.
Many also reported taking the same approach during the economic upheaval caused by Brexit with two fifths (41%) of businesses stating that Brexit caused them to increase their investment in innovation. This figure increased to almost half (48%) for businesses in the aerospace & defence and IT and software sectors, which used Brexit as an opportunity to develop more agile and flexible work technologies and move forward without major operational disruption.
Such economic events clearly provide the impetus for businesses to develop new revenue streams, acting as an ‘innovation accelerator’. ForrestBrown’s research confirms that a coming recession will offer another window for innovation.
While it might have been expected that businesses would become more risk averse when faced with uncertainty, with all board members looking to reduce any unknown factors including investment in innovation, ForrestBrown’s findings show the opposite to be true. With most saying their investment in innovation would increase, it’s clear that businesses are seeing innovation and the return on investment it offers as a way of dealing with an economic downturn.
Sara Brigden, managing director at ForrestBrown, comments: “In today’s challenging economic environment, one would imagine that businesses are keen to preserve capital and reduce debt to weather any potential downturn. Although this remains high on the agenda, acting with caution alone doesn’t equate to safety in uncertain times, and our research clearly shows that businesses recognise the importance of innovation for creating new sources of growth and revenue that allow them to ride the storm.
“Of course, while innovation can pull these businesses through, it also comes at a cost. The current macroeconomic environment has put funding under strain for many firms, who should instead look towards innovation incentives, such as R&D tax credits, to drive innovation within their businesses.”
