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21 June 2024

Creating Spaces Fit for Innovation Could Hold Key to Productivity Boost


Investing in physical spaces which support innovation activities could provide a huge boost to the UK’s productivity and create thousands of jobs.

A research paper from global construction specialist ISG, working with the Centre for Economics and Business Research (Cebr), makes the economic case that a renewed focus on investing in physical spaces which support innovation activities would boost UK GDP by £44 billion, support 726,000 new jobs and catapult the UK up the global productivity league table with a 32.7% uplift.

By surveying leading UK organisations across both the public and private sectors, ISG has recorded both sentiment and approach to innovation investment – one of the key drivers of economic prosperity.

The results suggest that while organisations largely continue to recognise the importance of traditional innovation activities such as training and technology, there is little evidence that these investments are delivering a tangible return in either enhanced productivity or sustainable commercial outputs.

The majority of surveyed organisations highlighted the key role that physical space played in nurturing and facilitating innovation, yet only 22% invest appropriately in this area.

Among survey respondents who said they valued innovation, 83% cited flexibility of workspace as crucial to their activities, followed by supporting collaboration, and promoting teamworking and idea generation. Of those who said that space was important for innovation, 49% highlighted that their current space was not appropriate.

Zoe Price, CEO of ISG, said:

“The spatial dimension in the formula for prosperity is perhaps one of the least explored and recognised elements that supports innovation, yet we instinctively understand its importance within certain sectors. The UK was the global leader in the development and successful roll out of the Covid vaccine, and unsurprisingly our analysis shows the fundamental importance this specific sector places on space to innovate. This focus and approach is mirrored across the media and entertainment and automotive sectors – again thriving industries where the UK has a globally renowned presence, generating wealth and prosperity for the domestic economy.

“The danger for sectors that reported the least investment, yet highlighted the most demand, for those unique spaces to support and unleash innovation potential, is a pattern of behaviour that prioritises intangible investment over spatial renewal or adaption. Both our survey, and the wider economic landscape shows that these traditional investment patterns haven’t shifted the productivity dial and are unlikely to do so in the future.

“Starting the conversation and elevating the importance of investment in physical space, to sit equally alongside technology and human capital investments, is a key aim of this white paper, as we seek to challenge existing orthodoxy that is demonstrably holding back our nation.

“The scale of the opportunity is highly significant and for context, if every UK organisation made appropriate investment decisions on space to innovate, UK turnover would increase by £96 billion – which is close to three times UK central Government departmental spending on goods and services in the month of January this year.”



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