Innovation spending feels the strain The Spring 2019 Trade Barometer also includes worrying data on innovation spending. For example, only 27% of companies currently spend a regular percentage of their turnover on research and development (R&D). Similarly, only 27% intend to invest in digital transformation over the next 12 months. This is concerning in the context of other research from Santander that shows a clear link between investment innovation and outperformance. Our recent Trailblazers study of high-growth businesses suggests that while more than six in 10 fast-growing businesses have a record of consistently increasing their investment, less than half of slower-growing businesses can say the same. Similarly, while 43% of fast-growing companies have recently increased investment in technologies such as digitalisation, the figure falls to only 19% amongst lower-growth businesses. It’s clear that a failure to invest will potentially undermine businesses’ efforts to improve their productivity, damaging their efficiency and competitiveness – and therefore their growth potential. There is no doubt many companies face a major dilemma. They are naturally reluctant to over-commit to investment during a period when they have unusually little visibility of their future growth prospects. Despite their very real concerns, the international trade and investment realities of distance and historical relationships mean that the EU – the UK’s largest trading partner - will continue to be enormously relevant. What is likely to be required is greater technical, in-country and sectorial support, and our unique set of country and sector specialists can help businesses through this challenging period.