UK industrial innovation lags behind Europe amid supply chain and investment hurdles

A new report highlights the UK’s declining competitive edge in manufacturing and high-tech sectors, revealing systemic barriers, low R&D investment, and the need for strategic cultural change to sustain innovation growth within the evolving European landscape.

New research from RS Group suggests that the UK’s industrial sector may be at risk of losing competitive ground in Europe due to a perceived lack of urgency around innovation. The report, “Staying competitive: innovation in UK industry,” surveyed 567 senior leaders across manufacturing, energy and utilities, and construction. While 90% of UK respondents acknowledge the importance of innovation, only 62% view it as essential for survival—significantly lower than comparable figures from Italy (80%) and France (84%). This gap in perception raises concerns about the long-term vitality of UK industry within the increasingly competitive European landscape.

The study highlights a range of factors impeding UK innovation, including systemic and technological barriers alongside economic challenges. A notable 78% of UK leaders reported struggles to align innovation efforts with the pressures of day-to-day operations. Supply chain disruption was identified as a particularly acute issue, affecting 41% of UK respondents, compared to 34% in France and 31% in Italy. These hurdles suggest that external economic shocks have taken a heavier toll on UK firms’ capacity to innovate.

Investment in technology emerges as a critical response, with 42% of UK decision-makers prioritising industrial IT, alongside targets such as Industrial Internet of Things (39%) and automation and robotics (36%). However, the report stresses that technology investment alone is insufficient without accompanying cultural changes to embed innovation as a core strategic priority rather than a sporadic undertaking. Mike Bray, VP of Innovation at RS, emphasised that while enthusiasm for innovation is strong, long-term success depends on leadership treating it as a non-negotiable element of organisational strategy amidst economic uncertainty and regulatory shifts.

This cautionary stance in parts of UK industry contrasts somewhat with other indicators of innovation vitality in the country. A recent study by Sopra Steria Next and INSEAD found that the UK leads Europe in corporate collaboration with start-ups, especially in artificial intelligence. Over 80% of British businesses view partnerships with start-ups as crucial to their AI strategies, achieving higher success rates than in other European nations. This dynamic suggests that while traditional industry segments may face challenges, innovation ecosystems around emerging technology fields display notable strengths.

London also remains a key hub for digital technology investment in Europe, according to EY’s 2025 UK Attractiveness Survey. Despite an overall 37% decline in UK digital technology foreign direct investment projects in 2024, Greater London attracted 96 such projects, the highest in Europe. Notably, India has surpassed the US as the UK’s top source of digital technology investment, underscoring a shifting global investment landscape.

However, broader concerns about investment competitiveness extend beyond industrial technology. The UK’s pharmaceutical sector has seen a marked decline in R&D investment and clinical trial activity, according to a Pharmaceutical Competitiveness Framework report. Life sciences foreign direct investment into the UK in 2023 was around 58% lower than in 2017, with the UK dropping from second to seventh place in global competitiveness rankings. This underscores challenges in maintaining the UK’s position in high-tech innovation sectors critical to economic growth.

The UK’s innovation challenge is further contextualised by government data showing relatively low R&D intensity—2.2% of GDP—compared to 3.6% across Europe and 5.1% in the Americas. While the UK ranks fifth on the Global Innovation Index and boasts world-class intellectual property protections and a strong legacy of scientific achievement, such as hosting over 75 Nobel laureates, experts emphasise the need to intensify efforts. The Department of Trade and Industry highlights that increased R&D and innovation investment are crucial drivers of economic growth in competitive free markets.

In response to such concerns, European institutions are focusing on boosting competitiveness through innovation. For instance, an upcoming European Research Council event will engage policymakers, industry leaders, and researchers in dialogue about leveraging science and innovation to strengthen economic performance against global challenges. These discussions highlight the role that fundamental research and supportive policies must play in fostering environments where innovation thrives.

In sum, while UK industry recognises the importance of innovation, the degree to which it is embedded strategically falls short compared to key European competitors. Challenges such as supply chain disruption and alignment with daily operational demands weigh heavily on progress. Yet areas like AI collaboration and digital tech investment in London reveal pockets of dynamism. With mounting evidence of declining competitiveness in sectors like pharmaceuticals and relatively low R&D expenditure, UK industrial leaders and policymakers face pressing questions about how to convert innovation potential into sustained strategic advantage.

📌 Reference Map:

• Paragraph 1 – ^[1] (IT Brief)
• Paragraph 2 – ^[1] (IT Brief)
• Paragraph 3 – ^[1] (IT Brief)
• Paragraph 4 – ^[1] (IT Brief)
• Paragraph 5 – ^[2] (Evening Standard)
• Paragraph 6 – ^[3] (EY)
• Paragraph 7 – ^[4] (ABPI)
• Paragraph 8 – ^[7] (CORDIS/DTI), ^[5] (Business.gov.uk)
• Paragraph 9 – ^[6] (UKRO)
• Paragraph 10 – ^[1] (IT Brief), ^[2] (Evening Standard), ^[4] (ABPI)

Source: Noah Wire Services

Noah Fact Check Pro

The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.

Freshness check

Score:
8

Notes:
The narrative was published on 28th October 2025, indicating recent content. The report titled “Staying competitive: innovation in UK industry” was released by RS Group, a reputable organisation. The report’s findings are consistent with previous discussions on the UK’s innovation challenges, suggesting originality. No evidence of recycled news or republished content was found. The inclusion of updated data and specific figures enhances the freshness score.

Quotes check

Score:
9

Notes:
The direct quote from Mike Bray, VP of Innovation at RS, appears to be original, with no earlier matches found online. This suggests the content is potentially exclusive. No discrepancies in wording were noted.

Source reliability

Score:
10

Notes:
The narrative originates from IT Brief UK, a reputable technology news outlet. The report is based on research conducted by RS Group, a well-established global product and service solutions provider for industrial customers. This enhances the credibility of the information presented.

Plausability check

Score:
9

Notes:
The claims regarding the UK’s industrial sector’s innovation challenges align with existing concerns about the country’s competitiveness in Europe. The statistics presented are consistent with previous reports and studies. The tone and language used are appropriate for the subject matter and region. No excessive or off-topic details were noted, and the structure is coherent.

Overall assessment

Verdict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary:
The narrative presents original and recent content from a reputable source, with consistent and plausible claims supported by specific data. The direct quote from Mike Bray appears to be exclusive, further enhancing the credibility of the report.