CBI warns on innovation

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British industry's investment in innovation is falling for the fourth year in a row, the Confederation of British Industry (CBI) said today.

At manufacturing firms it has now fallen below 5 per cent of the value of sales, down from 5.9 per cent last year and a 1994 peak of 6.7 per cent.

It was now at level which "should set off alarm bells" in boardrooms up and down the country, said the CBI.

The confederation warned that attitudes must change if Britain is to remain competitive against foreign firms which had a much more positive approach.

Lack of cash is not the problem it was during the recession earlier in the decade. The CBI's survey revealed "no clear constraints on innovation", although some respondents cited lack of good ideas as a reason.

It also showed that the need to win or retain customers in the short term drove most spending on innovation, whether it was in new technology or better administrative systems.

Most worryingly, according to the CBI, too many businesses were not adopting ways of measuring how much difference innovative tools or approaches made to perform- ance, which it said was "vital".

Adair Turner, the CBI's director general, said: "These results should set off alarm bells for British business.

"In a rapidly changing world we need to innovate to survive, yet the figures suggest that the lessons of the past have not yet been learned."