Businesses that innovate grow 10% faster
The UK’s most innovative businesses are growing their sales at a faster rate than other UK companies, with 9% growth during 2025, according to a new report.
New data illustrates that the greater the level of innovation, the greater the growth. Companies innovating experienced 7% increase in sales growth during 2025, with frontier firms – those at the forefront of innovation in their industries – seeing their sales increase by 9%. In stark contrast, non-innovators’ sales only grew by 0.4%.
The new State of Innovation 2025 report, authored by Innovate UK, suggests the number of companies innovating is on the rise too. Three in five UK businesses have innovated with their products or services this year, up from 56% in 2024.
This focus on innovation looks set to continue. Over half (51%) of the 2,000 businesses studied for the report plan to invest in R&D over the next 12 months, a 4% increase on 2025 levels.
Dan Hodges, deputy director of strategy at Innovate UK, comments on this year’s findings: “This year’s report powerfully demonstrates the clear link between innovation and sales, with the UK’s biggest innovators growing at a much faster rate than their less innovative counterparts.”
However, half (49%) of businesses have faced barriers to their innovation in the last year, with lack of bank or equity finance the biggest problem, cited by three-quarters (74%) of the innovators interviewed.
Micro-businesses are particularly vulnerable to such business blockers. There was a 10% rise in the proportion of micro firms reporting problems such as access to finance, uncertain demand, regulations, lack of public funding and skills shortages in 2025. In contrast, the proportion of large firms feeling these barriers declined by 8%, suggesting that once businesses reach a certain size, they are cushioned against some of the challenges holding smaller companies back.
Dan Hodges continues: “Innovation doesn’t come without its challenges, with many businesses particularly citing lack of bank or equity finance as their biggest barrier. That’s why it’s crucial that we continue to support the UK’s leading innovators – especially the smaller players – if we’re to help drive the economic growth their capable of.”
To find out more, read Innovate UK’s full report.