Why Europe lags in the innovation stakes

When it comes to research and development investment by UK businesses you could be forgiven for thinking you've heard the analysis before. The UK's - and indeed Europe's - best companies are as good as any in the world. The trouble is all the others.

Figures plucked from the European Commission's first annual 'Innovation Scoreboard', due out on Monday, will show European businesses invest just 1.19 per cent of GDP in R&D. That's 74 per cent below US levels and almost half of what Japanese companies manage.

Anyone feel like they can't say which economies have prospered most over the last 50 years? (The clue is in the paragraph above.)

We spoke to various experts about this EC report and the latest league table. But, one way or another, we ended up hearing the same explanation again and again: Companies and economies that re-invest higher proportions of their income do better over the long term.

Of course there are bright spots across Europe. Germany has long known the importance of proper investment, and the continent's multinationals in areas like pharmaceuticals and energy have done well.

But take a randomly chosen small or medium-sized business in the UK, and you can see why we come out seventh in a list of EU states behind Belgium, France and Germany, and the three Scandinavian EU members. There are exceptions - and thankfully we speak to many of them on a regular basis - but the overall team performance is disappointing.

There's no simple answer, and trying to point fingers at such a difficult time - when R&D budgets are being slashed in many tense boardrooms - is harsh. But just as with eating well and exercising moderately, we know what's good for long-term business health. Doing it is another thing.