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Rolls-Royce: UK's Engine of Growth?
24 Feb
Summary
- Rolls-Royce's share price surged 117% in the past year.
- Government R&D investment yields £33 in added value per £1.
- UltraFan engine could generate £100bn in sales and 40,000 jobs.
Aerospace giant Rolls-Royce stands as a pivotal force in UK manufacturing and productivity. Investors have been rewarded with a 117% surge in its share price over the past year, with expectations for further returns through dividends and buybacks. The company's investment in R&D and new technology is poised to yield significant future returns.
Every pound invested by the UK Government in Rolls-Royce's R&D generates an estimated £33 in gross added value for the British economy. A major opportunity lies in the narrow-body jet market, where a comeback using the UltraFan demonstrator engine could be worth £100 billion and secure 40,000 skilled jobs.
However, the company requires up to £200 million in government R&D support for this ambitious project. Bureaucratic obstacles and fears of favouring one company over others, such as Airbus, are causing delays. This situation echoes past governmental hesitation, such as the missed opportunity with AstraZeneca's vaccine investment, which largely moved overseas.
Rolls-Royce contributed £7.4 billion to UK GDP in 2024, with substantial productivity uplifts from R&D. The company's future success hinges on timely governmental support, a critical factor for securing its leading position in global engineering.
