Long-term trends and strategic challenges

Remaining at the forefront of the innovation agenda

The region must build on its major strengths - as a creative region, with a history of leading R&D and innovation. The region has the highest level of business enterprise research and development (BERD) per unit of GVA in the UK and amongst the highest levels in the EU. It also has technology, health and life sciences clusters of international scale and repute.

The nature of innovation is changing - and the region must change and
adapt with it.

  • multi-national corporations are increasingly distributing R&D activities across global value chains
  • alongside technological innovation, where the East of England has historically excelled, there is increased focus on innovation in services and business models
  • innovation is taking place at the boundaries of disciplines and sectors and there are new collaborations between higher education, research institutes, the National Health Service and the private sector
  • consumers and suppliers are being increasingly involved in the development of products, services and digital content
  • the arts and creative practise are being increasingly drawn on to innovate
  • the next generation of web-based communities and social networking is providing new channels for people to shape their own lives and experiences.

Creativity therefore needs to be centre stage in education, in the way we design our towns and cities, and in the strategies of all private and public sector organisations.

To remain a leading international region for R&D activity, the East of England must also maximise the benefits of its position as part of the Greater South East. The Greater South East comprises the East of England, London and the South East and is one of the world's most successful and dynamic centres of the knowledge economy. The East of England plays vital roles in the Greater South East - as a centre of world-class technology clusters and R&D, connecting the UK to global markets through expanding international gateways, as a source of high skilled labour and a residential and leisure destination of choice for London. The Greater South East is the powerhouse of the UK economy and the largest market for other UK nations and regions.

Together, the three regions account for:

  • 35 per cent of UK’s population - at 22 million people it is of a similar scale to Shanghai

  • annual GDP of £451 billion - 42 per cent of UK output

  • 40 per cent of government R&D and 60 per cent of private R&D investment

  • 71 of the UK’s 131 higher education institutes, including the UK’s leading research universities

  • 54 per cent of UK venture-backed companies and 70 per cent of venture investment

  • UK leadership in exports and international business collaborations

  • 100 per cent of net regional receipts to HM Treasury.

The Greater South East can lay claim to the position as Europe’s only credible challenger with the critical mass to rival the major US economies and emerging mega-regions in Asia. In the period 2000-2005, the Greater South East has seen leading rates of real hourly productivity above the levels of US comparator regions and Ile de France, the next largest EU mega-region.

The Greater South East’s leadership in the knowledge economy is demonstrated by:

  • London’s increasing lead in global financial markets, driven by excellence in product innovation, the ability to attract global talent, market access and a competitive regulatory framework

  • London topping the Global and World Cities indices of world city financial and business connectivity, and Europe’s best city in which to locate a business

  • in 2005, the Greater South East accounting for £992 million of venture capital investment, significantly above the total levels for France (£457 million) and Germany (£363 million). London and Cambridge are in the top five EU locations for venture capital activity

  • Cambridge being home to EU-leading biotechnology and ICT clusters

  • the Greater South East leading Europe in terms of world-class universities, corporate research facilities and centres of excellence

  • four universities being in the top 30 of Shanghai Rankings 2006 (Cambridge, Oxford, Imperial and University College, London) with only one other European university in the top 30

  • Greater South East universities matching many top US universities in investment attracted to spin-outs and licensing returns

  • the Greater South East containing major research facilities for over half of the top 20 global companies for R&D, which together account for $116 billion (28 per cent) of global R&D spend.

The long-term competitiveness of the Greater South East is not assured. The Greater South East suffers major constraints, such as housing supply and affordability, among the highest levels of congestion in Europe, lagging investment in science and a weak skills base in comparison with competitor regions.

Commuting to London has major impacts on economic performance in the Greater South East. The East of England's commuters are concentrated in the southern half of the region in  Hertfordshire, Essex and along the main rail radials into London - and account for the £10 billion difference between the region’s workplace and residence-based GVA. The benefits of the Greater South East go beyond the wealth generated by residents who live in the East of England and commute to London. The challenge for the region is to build on the economic linkages within the Greater South East to create further sources of competitive advantage and growth. The size and dynamism of markets and innovation excellence in the Greater South East is outstanding, and there is huge potential for additional growth through greater collaboration between our businesses and institutions and promoting our collective strengths.

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