Report

Physics and the Economy: Measuring the value of physics-based industries in the UK

The new Physics and the Economy project has highlighted the huge contribution physics makes to society and how this has grown across the last decade.

Measuring the performance and growth of the physics sector between 2010-2019, the Institute of Physics (IOP) and the Centre for Economics and Business Research (CEBR) found that, in 2019 alone, physics directly generated £229bn gross value added (GVA) or 11% of total UK gross domestic product (GDP).

Within the UK physics sector, there are more than 2.7m full-time employees – accounting for 10% of total UK employment, and labour productivity in the sector is strong, at £84,300 per worker, per year, up from £79,000 in 2010.

Research and development (R&D) is vital for a thriving modern economy and society, progressing technological advancements, and enabling us to overcome the challenges we face. Physics-intensive industries are a catalyst for this, performing one-third of all business-conducted R&D. The economic and innovation power of the sector will underpin the nation’s efforts to mitigate climate change and public health challenges, support the post-Brexit economy, and drive the technological advancements of tomorrow.

Investing an additional £8.8bn in R&D in the UK physics sector would generate a GVA increase of £34.3bn and additional turnover of £52bn, creating significant economic returns to the UK.

Without continued investment in the physics sector and its R&D activities, the UK and Ireland risk missing out on the substantial economic returns the sector generates. In the UK, the government must continue its progress to meet the spending target of 2.4% of UK GDP on investment in R&D by 2027.