The CBI says improving UK supply chains could boost the economy by £30 billion and create half a million jobs.

In a new report the business group points to underinvestment in research and development and a growing skills crisis, which it says are weakening foundation industries key to supplying advanced manufacturing.

These include suppliers of plastics, metals and chemicals to cutting edge manufacturers.

The CBI has called on the government to help increase total spending on R&D to 3% of UK gross domestic product and to extend R&D tax credits to support the commercialisation of innovative products.

It also wants the UK’s innovation agency Innovate UK to double its spending during the next parliament and for more financial incentives for science, technology engineering and mathematics.

CBI deputy director Katja Hall said: “The scale of the challenge is sizeable - our competitors are powering ahead, with France outstripping our R&D investment by 40%. At the same time, only 3% of our graduates end up in engineering or technology jobs.

“We need policies which focus on creating long-term value - from increasing R&D spending to establishing a UK-wide materials strategy - to enable industry to play to its strengths and compete effectively on the world stage.”