The impact of Brexit on the R&D sector

Date: 29-06-2016
By: Jonathan Burroughs

On the 23rd of June the UK voted to leave the EU. This blog looks at the possible impact Brexit will have on our sector.

Funding of University Research

The Facts
European Research Council and the Horizon 2020 programmes provide significant levels of funding to research conducted in the UK. The Leave Campaign suggested that the UK Government ought to make good any shortfall in science funding and work to ensure that UK science will still receive the support anticipated before the Brexit decision.

The UK currently receives funding for more Horizon 2020 projects than any other European country – UK with circa 1,500 today, no other country getting to above 900.

In the year 2014-15, the UK received £1.23bn in research income from international sources. The majority of this came from EU government bodies.


Source: International Higher Education in Facts and Figures, Universities UK, June 2016

"Until the end of the negotiations, UK remains Member of the EU and therefore with all the rights and obligations, including in relation to Research Programmes like Horizon 2020," Carlos Moedas, EU Commissioner for Research and Innovation has told Science|Business.

Creative Places’ Expectation
We are confident that research funded projects that have been agreed with Europe will receive their money and there is still scope for new applications to be successful. We think that the UK government is likely to step in with funds to ‘in theory’ keep funding at levels close to what they may have otherwise been as the UK leaves the EU. However, EU funding is often linked to other EU organizations and is bid for on a project by project basis. Therefore, knowing what we may have otherwise received will be difficult to predict. In practice we may find it harder to bid for joint projects because of lack of certainty over the UK government’s commitment to pay a contribution towards the overall cost – unless it goes on the offensive. This it will simply have to do, ring fencing at least a certain level of funding to match fund with EU money further joint projects involving EU member states. Setting up governance arrangements that can satisfactorily deal with project selection and ‘subject to EU match funding’ commitments that will need to be made at short notice will be a challenge.

A modest reduction in levels of investment into UK science might be anticipated if the UK economy suffers as a consequence of Brexit as the UK government has less money to go round.

Research staff

The Facts
Many of our research staff are non-British EU nationals whose scientific knowledge and indeed excellence help us in terms of research excellence/competitiveness. Controlling movement of people involved with leading edge science requires particular care. Recent governmental activity that restricts this (not just from UK government) has shown that impact can be significant on UK universities (teaching and research).

Creative Places’ Expectation
We have every belief that the UK government will work hard to ensure that overseas researchers can still come to the UK. We would be surprised if its steps to reduce immigration will bite hard in relation to research activity where we genuinely have world leading science.

 

Funding to Venture Capital Backed Companies

The Facts
In 2015 UK companies received $5.2 billion
In 2015 rest of Europe received $8.8 billion
The percentage of money into UK effectively stood at 37 %
In Q1 of 2016 the UK companies received $1.3 billion, the rest of Europe $2.2 billion (providing us with a 37 % share again, similar to that enjoyed in 2015)

Source: CB Insights

Creative Places’ Expectation
We believe that we should anticipate that investment will be slightly down across Europe, UK investment will be down, but the UK’s share of the money into Europe will not be very materially down in percentage terms in 2016. Areas potentially subject to most change as a consequence of Brexit are Life Sciences and Fintech.

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