That's a question we were asked recently following the publication of the 2025 Global Innovation Index (GII) by the World Intellectual Property Organisation last month...

This year the UK has slipped to 6th globally, falling from 4th in 2023 highlighting that while the UK is a leading innovation hub, absorptive capacity is moderate but uneven across sectors and regions.

Looking at the GII, which evaluates innovation capabilities across indicators grouped into innovation ‘inputs' a (the factors enabling innovation) and innovation ‘outputs' (the results), it's clear we're good at generating scientific R&D and start-ups but are persistently weak translating this into broader economic productivity.

UK strengths

• The rank of 4th for Knowledge and Technology Outputs and 3rd for Creative Outputs reflects the strength of our world leading universities, research and innovation centres and our creation of intellectual property.

• Strong innovation clusters in London, Oxford, Cambridge, and Manchester are ranked among the world's best and London attracts venture capital deals.

• We perform above expectations, pushing out more innovation outputs than expected based on innovation investments.

UK weaknesses

• Our innovation inputs are weaker than our outputs, with a 2025 ranking of 10th suggesting we don't create the right conditions for innovation.

• The UK's rank for ‘business sophistication' is 17th indicating weaknesses in R&D conducted by industry and showing smaller businesses (with the majority of the UK's businesses being small to medium sized - SMEs) face greater barriers to innovation.

• Low investment rates especially in intangible assets like R&D and IP and in fixed capital assets such as buildings and equipment, suggests the UK is underinvesting in crucial assets needed for the future.

• Productivity. Often cited as a concern by policy makers and industry, our high innovation output doesn't translate to the same level of productivity growth.

Looking at the bigger picture it's clear the UK can lead the world and major European economies in innovation but that its absorptive capacity is waning. We have plenty of world-class research and entrepreneurs and startups with amazing innovative ideas, but we fall short in diffusing this creativity effectively and applying it to commercial or social sectors.

We know knowledge adoption and exploitation is good in sectors such as technology, finance, and education but weaker in manufacturing, care, and some public sectors.

Analysis by Nesta, the UK's innovation agency for social good shows only 4 out of 12 UK regions are good at creating knowledge and only five are effective at spreading it.

To level up this disconnect we need to

• address weaknesses in investment, difficulties in accessing finance and the scale-up and commercialisation of new products, materials, processes, and services.

• tackle key barriers such as the persistent skills shortages and regulatory uncertainty.

• address the tendency to concentrate on adoption in specific sectors and regions (typically the South-East) so the potential for growth is fair and balanced across the UK. And,

• Create a pipeline linking ‘concept to consumer' to better connect ideas from the research community with industry that can effectively apply them at scale.

FIVe through the Foundation Industries Consortium (FISC) is helping innovators on their commercialisation journey through access to investors, finance, world-leading scale-up centres, and tailored business support while supporting government and policy makers to understand and address regulatory barriers across the FIs. If you'd like to talk to us, please email info@fiventures.org

Published: 20-10-2025