This concern is echoed by the Learning and Work Institute's forecast of a 2.5 million shortfall in highly skilled workers by 2030, which could cost the UK £120 billion.

Financial and regulatory challenges also weighed heavily on businesses. One in five leaders (20%) reported difficulties securing funding or external finance as a major hurdle, while 23% pointed to regulatory constraints. Additionally, 18% cited a lack of sufficient financial incentives, such as R&D tax relief and grants, as a key factor limiting their ability to invest in innovation.

Despite these barriers, nearly three quarters (74%) of large businesses invested over £200,000 in innovation during the past year, with 39% spending more than £400,000. However, future investment is at risk, with 24% of business leaders expressing concerns over economic and political uncertainty as the primary challenge moving forward.

The research also highlighted strong support for increased public investment in innovation, with 70% of businesses advocating for higher government spending in this area. However, for these investments to truly make an impact, they must be paired with reforms that address the financial, regulatory, and skills-related barriers UK businesses face, creating a more favourable environment for innovation.

Sara Brigden, Managing Director at ForrestBrown, said: “Businesses have a vital role to play in the government’s ‘national mission’ of economic growth so it’s good news to see so many companies committed to investing in R&D. However, challenges remain, with economic and political certainty creating the most concern.

“The Autumn Budget provides an opportunity to address this issue by creating a stable environment in which innovative businesses can plan and invest with confidence. With the right incentives in place and a long-term commitment from the government to maintain support for business innovation, the full potential of private sector R&D investment can be realised.”