Harnessing AI
Opportunities and challenges
The UK is home to a thriving AI community, the largest in Europe and fourth globally, behind the US, China and Israel. The sector is valued at £72.3bn, with 20 unicorns and over 1800 startups.
We surveyed 150 UK-headquartered AI businesses, allowing us to explore the challenges and opportunities they face.
Access to the latest hardware, including supercomputers, is the clear critical factor for the UK to be a global leader in AI. Developing AI requires deep pockets, and current levels of investment by the largest overseas tech companies is deeper than nation-states. Access for businesses of all sizes will be crucial.
What does your business believe to be the most critical in the UK reaching its stated aim to be a global leader in AI?
AI businesses
Access for UK AI companies to the latest hardware, including supercomputers
Government-backed initiatives to address the relevant skills gap in this area
Government funding and financial support for UK AI companies
Incentives to encourage financial investment in UK AI companies
AI is a general-purpose technology, with the potential to have a transformational impact across economies and society, equivalent to the printing press or steam engine. It is encouraging to see that our homegrown UK AI companies are developing solutions across all industries, plugging into and accelerating the broader economy. This will drive economic growth for the UK.
What industries are the AI solutions your business creates primarily designed to help?
Technology
Life sciences/healthcare
Manufacturing/Industrials
Consumer markets
Energy and natural resources
Professional services
84% of UK AI companies surveyed feel confident moving forward under the Labour government. The biggest barrier by far would be a recession and economic volatility. It is still early days for this new government, which has cited technology as a key aspect of enacting their policies and reforms. The word "technology" was used 34 times in the autumn budget policy paper, but there is clearly more detail to come on how government policy will support the tech sector, including transformational technologies like AI.
Do you agree or disagree with this statement: "I feel more confident my technology business will grow under the new Labour government"
Strongly agree
Somewhat agree
Neither agree or disagree
Somewhat disagree
Access to investment is critical and AI businesses are looking to raise funds – almost three-quarters within the next five years and over 50% within two years. Increases to Capital Gains Tax (CGT) in the autumn budget were less significant than rumoured. Any increase in these taxes is likely to have a dampening impact in investment, but these more modest rises will hopefully not deter investment too significantly. The UK’s CGT regime remains the most competitive rate in Europe.
The government protected over £20bn of research and development (R&D) spending for science-based R&D. For AI companies aligned to these sectors, they will undoubtedly benefit, although business leaders will be asking for further commitments, as developing AI requires significant investment.
Professor Dame Angela McLean and Dr. Dave Smith will lead a review on barriers to the adoption of transformative technologies that enhance innovation and productivity. An Artificial Intelligence Opportunities Action Plan is promised “shortly”.
Is your business considering any of the following, and if so, in what time frame?
■
A fund-raising round
■
Planning an exit
In the next 12 months
In 1-2 years
In 3-5 years
In more than 5 years
Not considering
Is your business considering any of the following, and if so, in what time frame?
A fund-raising round
In the next 12 months
In 1-2 years
In 3-5 years
In more than 5 years
Not considering
Planning an exit
In the next 12 months
In 1-2 years
In 3-5 years
In more than 5 years
Not considering
Planning an exit
What geographic areas do you see as strategically important to your business growth?
What geographic areas do you see as strategically important to your business growth?
Despite criticism that the EU AI act is overly onerous, UK AI businesses have highlighted Europe as the key market for global expansion. It is encouraging for the UK economy that UK AI businesses are planning to tackle overseas markets.
Aspirations for international expansion create new opportunities and challenges, and workforce is a key area to consider.
It is essential that AI businesses in the UK continue to attract and retain skilled talent to help them scale effectively and achieve their business goals – whether they are working towards another funding round or planning an exit.
It will be fascinating to see the growth of AI under the new government, but removing barriers to accessing the latest hardware is crucial to help fuel this growth and continue to position the UK as a global tech leader.