Britain finishes last in league of world's most innovative firms

Unilever is only UK company listed as an innovator in top 100 table – and its half-Dutch Unilever

Britain's leading businesses are innovation flops, a report will say today, with just one company in a worldwide top 100, leaving the country ranked alongside the tiny principality of Liechtenstein.

Britain's miserable showing in the Thomson Reuters Top 100 Global Innovators, published today, compares with the US, accounting for 40 entries, and Japan, on 27. In Europe, traditional rival France is the leader with 11, although Sweden also scores highly with six, followed by Germany, with four.

Arguably Britain's representation should be considered a half because it is Unilever, the products group which is in reality an Anglo-Dutch business. That would put this country behind Liechtenstein, whose machinery manufacturing group Hilti gets on to the list.

The handful of remaining British manufacturers considered as world class, such as Rolls-Royce or BAE Systems, are absent. And it bodes ill for the Government's hopes that the country's private sector will serve as an engine of recovery by providing jobs to help ease the pain of the mass lay-offs expected in the public sector as a result of cutbacks.

The top 100 was put together by considering patents. As well as volume submitted the authors looked at success, or how often a company's applications are granted, together with global reach and influence based on how often patents are cited in future applications.

A notable omission from the top 100 is China, where despite a huge number of applications submitted, rather less have been successful or had a global impact.

The report's authors said their research showed companies in the top 100 added more than 400,000 new jobs in 2010 over 2009, 3 per cent more than the prior year and greater than the percentage increase in growth experienced by the broad-based US S&P 500 companies index for the same period.

Additionally, the 2011 Top 100 Global Innovator organisations had a 12.9 per cent increase in market capitalisation weighted average revenue over the prior year, whereas the S&P 500 market cap weighted average revenue increased by just 7.2 per cent.

Bob Stembridge, one of the report's authors, said: "What the report is looking at is technological innovation. The reason the UK has performed poorly could be a reflection of its economy. It is largely service-based rather than manufacturing. And that's not to say that there is no innovation in services – if you look at financial services and banking, they can be very creative, but they don't tend to show up in patents."

The Government has sought to address the issue by introducing a tax rate of just 10 per cent on profits generated from new patents, less than half the rate of corporation tax.

But Mr Stembridge warns that Britain has a long way to go to catch up with rivals, and such measures could take some time to be felt. He added: "China is an interesting case because there is an explosion in applications but much of them are domestic and what does get through to the grant stage haven't yet been widely cited worldwide."