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The contribution of medical funding by charities to the UK economy

Third sector medical research plays an important role both in the UK economy and in society.

Medical research makes huge contributions to society through developing new treatments, improving existing ones and advancing technologies that can help save lives such as vaccines that help to fight against infectious diseases such as Covid-19.

Charities are major funders of medical research in the UK. Medical research funding by charities has been estimated to be 14% of all public funding of medical research in the UK, providing £1.2bn in 2018.

Without charity funding, the UK Government and public bodies would need to increase their direct funding1 of health-related research by 85% to cover the shortfall.

Our findings in the accompanying report show that whilst medical research has grown substantially since 2014, medical research funding by charities fell in 2020.

Furthermore, whilst the primary aim of medical research funding by charities is to create benefits to people’s health, the funding also makes a significant contribution to the UK economy:

  • Recipients of research funding purchase goods and services in order to undertake their research. This generates activity in their supply chains and across the whole of the UK economy.
  • R&D can boost output and productivity in an economy with new technologies, medicines and processes.
  • As new methods and technologies are discovered, there are knowledge spill-overs into the public, private and third sectors which boost productivity and economic growth.

This report examines the first of these contributions and estimates the economic impact of medical research funding by charities on UK supply chains in terms of jobs, output and GVA (Gross Value Added).

Our results estimate that in 2019, medical research funding by charities supported 51,350 jobs, £5.9bn in output and £3.5bn GVA in the UK.

The pandemic had a significant impact on medical research funding by charities, placing jobs in research and the wider economy at risk. In 2020, the fall in medical research funding by charities put 3,900 jobs, £455m output and £265m GVA at risk in the UK.

We also estimate multipliers for medical research funding by charities and compare these to 104 sectors of the UK economy. Every £1 million spent on medical research funding in the UK by charities supports:

  • £3.15 million of output – 31st highest multiplier out of 104 sectors.
  • £1.83 million of GVA – 5th highest multiplier out of 104 sectors.
  • 27 jobs – 14th highest multiplier out of 104 sectors.

Authors

James is a Fellow at the Fraser of Allander Institute. He specialises in applied analysis of trade and climate change. His work includes the production of economic statistics to improve our understanding of the economy, economic modelling and analysis to enhance the use of these statistics for policymaking, data visualisation to communicate results impactfully, and economic policy to understand how data can be used to drive decisions in Government.

Ben is an economist at the Fraser of Allander Institute working across a number of projects areas. He has a Masters in Economics from the University of Edinburgh, and a degree in Economics from the University of Strathclyde, as well as experience working on a variety of projects for public, private, and third sector organisations. He also focusses on business survey design and dissemination.

Adam is an economist at the FAI who works closely with FAI partners and specialises in business analysis. Adam's research typically involves an assessment of business strategies and policies on economic, societal and environmental impacts. Adam also co-leads on the FAI's quarterly economic commentary.

Find out more about Adam.

Part of Collection

This project provides analysis of the economic contribution of third sector medical research. The analysis covers the impact to the UK, Scottish and Northern Ireland economies. We also include an analysis of the share of the UK impact which is generated in Wales.