Collaboration between UK universities and businesses is starting to “slip back” after decades of growth, a new report has warned.

The annual National Centre for Universities and Business (NCUB) report found that 81,499 interactions between universities and businesses were recorded in 2023-24 – 6 per cent more than the year before.

There were 9 per cent more interactions between universities and small and medium-sized enterprises (SMEs), and a slight increase in interactions with large businesses.

Although these were both up on recent levels, the NCUB warned that collaborations with businesses are still well below pre-Covid baselines and their peaks in 2016-17.

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Large, research-intensive universities and specialist institutions in science, technology, engineering and mathematics have driven much of the growth, with smaller universities facing “persistent capacity constraint”.

Despite higher interaction levels, researchers also found that business collaboration income fell 2 per cent to £1.34 billion in 2023-24.

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And licensing income was also found to have fallen 6 per cent, with a sharp decline in the number of large business licences and an overall drop in the number of licences issued.

The report did uncover some good news for the country’s spin-out ecosystem, with the number of active spin-outs growing 7 per cent. Investment rebounded to £3.5 billion but remains below its 2021-22 peak, and survival rates hit record highs.

But, said NCUB chief executive Joe Marshall, beyond these positive signs is a more “fragile picture”, with companies investing less in turning world-class ideas into economic impact.

“Capacity on both sides is under strain, with the total value reducing, and the foundations that make collaboration possible are facing increasing pressure.”

Overall, the data shows strong activity in engagement and spin-outs but “persistent weaknesses” in collaboration income, licensing and Innovate UK funding.

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Coming shortly after the budget, the report underlined the need for the UK to drive economic growth, said Marshall, who warned that it was a bad time for collaboration to “slip back”.

“The system still excels at generating ideas, producing world-class research and creating high quality spin-outs but is becoming less able to secure the industry pull, co-investment and translational capacity needed for innovation to scale,” said Marshall.

The report includes the NCUB’s first Global Benchmarking Framework, positioning UK performance alongside international peers.

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It suggests that the UK continues to perform strongly in attracting international talent but faces “structural challenges” in developing advanced skills, deepening industrial capacity and translating collaborative research into economic outcomes.

The benchmarking found that the UK ranks in the middle of a list of similar countries for investment capacity but seems to be declining rather than rising. For foreign direct investment in research and development it has fallen outside the top five for the first time.

Authors warned that the UK’s funding model remains world-class in design but faces resource constraints that limit scale and reach.

Marshall said rebuilding capacity and restoring confidence must be national priorities and that the country must successfully translate its intentions into action.

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“If we succeed, the UK can convert its research excellence into a genuine economy-wide advantage. If we fail, we risk losing ground to international competitors who are strengthening connections between research, skills and industry far more rapidly.”

patrick.jack@timeshighereducation.com