Unlocking the UK’s AI Potential: Harnessing AI for Economic Growth
Today, Public First publishes new research commissioned by Microsoft examining how the UK can harness AI to power economic growth. Using a combination of new economic modelling and an extensive survey of over 1,000 senior business decision makers in the UK we explored the opportunities created by digital technology for the UK, the supporting investments that will be needed to realise these opportunities and the current barriers to adoption.
Recent news of a $1bn investment in Wayve – a UK business developing AI to power autonomous vehicles – and the decision by Scale AI to choose London as its European HQ cements the UK’s leadership in artificial intelligence, and corroborates our own findings that the UK is second behind only the US in its ability to take advantage of AI.However, we also found that there are numerous risks to that prime position if the UK does not place the right enablers to ensure that all parts of the economy can take full advantage of AI. We found three core bottlenecks that could hold back the UK’s AI potential: infrastructure, adoption and skills.
Conversely, our research found that investing more in infrastructure, cloud, AI and digital skills can help the UK retain its leadership position and have an average societal ROI to the tune of 5:1 in the next decade. Investments from private companies – like Microsoft who have committed £2.5bn over the next three years, more than doubling its data centre footprint and training more than 1 million people for the AI economy – is only part of the story.Already, a number of government commissioned reports such as the Independent Review of the Future of Compute identify several challenges that have held back investment in core infrastructure required to power the future. For example, in 2022 the UK only had 1.3% of global compute capacity. To ensure that the benefits of AI are felt broadly across the economy, the UK must invest now to meet the accelerating demand for compute. This means lifting planning barriers, speeding up energy connection times and increasing energy supply.
Secondly, the government must work with industry to encourage adoption, and show the concrete benefits both AI and existing digital technologies can create for businesses. Our survey of business decision makers found that digital adoption was uneven across the economy. We found that this aversion was driven predominantly by a lack of awareness, with half of the businesses we surveyed saying that they did not know of any compelling use cases to make further investments in digital technologies.
Finally, while much of the discussion on AI has centred on the impact on jobs, we find this to be overstated. In our modelling, less than 4% of the occupations we looked at saw a majority of their tasks able to be automated.
This, however, is not to say that roles won’t change. To ensure Britain future proofs itself for the advent of AI, building the right digital skills will be key. Already, in our polling, digital skills were seen as the type of skills businesses thought it would be helpful to have more of:And over two-thirds (69%) of senior decision makers told us digital skills were either essential or very important to the running of their business. This will likely only increase as AI is more deeply integrated into workplaces up and down the country.
The opportunity is there to be seized and the UK is currently near the front of the pack. However, without the necessary infrastructure, demand and skills, the potential gains from AI will not happen. A slower adoption curve has enormous consequences for the UK. Our modelling found that even adding just five years to the time it takes for AI to fully roll out would reduce the size of the economic impact by over £150 billion.