The UK's top 850 research and development (R&D) companies increased their investment to £20.9bn over the past year, up nine per cent on the £19.1bn spent in 2005.

The 75 UK organisations carrying out the most research grew their spending by 11.9 per cent, beating the global average of 10 per cent. The figures were published in the 2007 R&D Scoreboard by the Department for Innovation, Universities and Skills.

The fixed-line telecommunications sector reported the largest growth, as investment increased 54 per cent to £1.1bn. The pharmaceutical industry remained the country's largest contributor to R&D, with spending totalling £7.4bn

The strong figures were welcomed by Richard Lambert, director general of the Confederation of British Industry.

"It is excellent news that UK businesses' investment in R&D continues to grow at a healthy rate and this year our biggest players have out-performed their international peers in terms of R&D growth," said Lambert.

"For our businesses to remain competitive in an increasingly globalised economy, it is essential they invest in R&D, skills, software, intellectual property and design," he said.

"The government plays a key role in creating the right environment for this investment through its R&D tax credit and direct funding. But it needs to become more ambitious in its use of public procurement and policy strategy to stimulate investment and create new markets for innovation in the UK. An improving R&D picture is vital so that the UK is well placed to rise to the big challenges of our day such as climate change and global insecurity."