The Government is being urged to acknowledge the importance of research and development investment in driving economic growth.
The Society of Motor Manufacturers and Traders is calling for measures to incentivise funding and build a more balanced economy.
The call comes as a new report, published by the Centre for Economics and Business Research (CEBR) and commissioned by the SMMT, highlights innovation as a key driver of productivity and growth, but that R&D spend is low in the UK compared to leading international markets.
The SMMT also urged government to improve the availability of finance to businesses and individuals as this, coupled with R&D investment, is key to the UK becoming a global leader for low carbon technology.
The CEBR says current lending to businesses and consumers is well below the level required to secure sustainable growth and that during the credit crunch, lending to manufacturers reduced significantly.
The report also highlights the need for government to support industry’s continued investment in R&D.
“This report is an important indicator that businesses and consumers need more and better priced finance, particularly as momentum builds towards achieving a low carbon revolution in the UK,” said Paul Everitt, SMMT chief executive.
“UK automotive has the potential to be at the heart of a global low carbon revolution that will encompass current and future technologies and fuels.
"For this to happen, industry needs government to encourage the private sector to invest in R&D, driving economic growth through world class innovation.”
Findings of the report were previewed last week at the first meeting of the all-party parliamentary motor group where the SMMT urged government to prioritise measures that encourage private investment in R&D in next month’s comprehensive spending review.
“The economic recovery is progressing through a fragile stage and it is crucial that the automotive industry, one of the key pillars of our economy, is supported to enable its development and growth,” said chairman of the All-Party Parliamentary Motor Group, Richard Burden MP.
“Government has a responsibility to play its part, but private investment also has the potential to give this industry a solid foundation in the next phase of the automotive industry’s development, enabling the country to build on its skill base and engineering excellence, establishing the UK as a world leader for low carbon technology.”