The report identifies four key challenges: low levels of investment in the PBI sector; the low rate of commercialization of academic physics research; the shortage of physics graduates; and the poor image of science and engineering-based industry. The investment problem manifests itself in two ways: the low levels of investment in capital expenditure per employee compared with other sectors, and what the report describes as the “indiscriminate shunning” of technology companies by the investment community since 2000. The fact that around half of today’s physics graduates find jobs outside traditional physics-based industries also presents problems for PBI companies.

The report calls for “effective and informed” investment in industry and for the implementation of policies to close the “R&D investment gap”. Other recommendations include initiatives to encourage entrepreneurship and technology transfer in the physics community, especially in universities, and a national effort to increase the numbers studying physics at school and university level. The report highlights photonics and nanotechnology as two potential growth areas for physics-based companies.

Speaking at the launch of the report Institute president David Wallace said: “I am proud that physics plays such an important role in the UK economy, and look forward to seeing that role continue to increase in importance over the next 10 years, as it shows every indication of doing.”

John Taylor, director general of the research councils, said that micro- and nanotechnologies would be vital for the future of manufacturing. “It is very clear that the future of the UK is about very high value-added industry, businesses and services,” said Taylor. “The high value added and the high barrier to entry come in no small part from mastering the novel capabilities from research in science and technology.”