AI Takes the UK By Storm: 5 Strategic Developments

The United Kingdom (UK) is the beating heart of European tech as the continent’s best-funded country and investment attraction. The UK’s AI sector has been booming over the past few years, with a third of Europe’s AI start-up companies located in the UK. There are currently over 1,300 AI companies in the country – a whopping 600% increment over the last decade. Here are five important developments that highlight the UK’s journey to becoming a global AI superpower.  

 

1. The UK AI market is estimated to grow to over $1tn by 2035 

According to a 2023 study by The International Trade Administration, the current AI market in the UK is valued at over $21bn. That number is predicted to grow exponentially to more than $1tn by 2035 and may improve the UK’s current standing as the third largest AI market globally behind the U.S. and China.  

The UK is also attracting lucrative investments from tech companies across the pond. Salesforce is planning to invest $4 billion in its UK business in the next five years in response to strong demand for AI and digital transformation. Furthermore, Google has partnered with the University of Cambridge to drive progress in responsible AI through a multi-year research collaboration agreement and a grant for the university’s new Centre for Human-Inspired AI.  

Additionally, the UK is a market leader in open source AI, home to providers such as Significant Gravitas and Stability-AI. Founded in 2018, Significant Gravitas made a name for itself with the development of AutoGPT, a semiautonomous variant of ChatGPT. Significant Gravitas’ open AI code repository is number one in the UK and is the second AI project to gain 100,000 stars on GitHub.  

Furthermore, research by the Office for Artificial Intelligence and the Department for Science, Innovation, and Technology discovered that over 3,000 companies in the UK generated £10.6bn in AI-related revenue in 2022. 60% of AI businesses are purely AI companies, while 40% are diversified companies with AI offerings. 

The study also found that the industries that widely utilize AI are: 

• Automotive 
• Industrial automation and machinery 
• Energy, utilities and renewables 
• Health, wellbeing and medical practice 
• Agricultural technology  

 

2. The UK AI sector is booming with £18.8bn investment, £3.7bn GVA, and 50,000 jobs 

More than 50,000 people work in AI-related roles, yielding £3.7bn in gross value added (GVA). The AI sector has also secured £18.8bn in private funding since 2016. Research from McKinsey also predicts that the value of generative AI could be equivalent to the UK’s total GDP to the work economy over the next few years. 

Recognizing AI’s potential to spur economic growth, the government introduced the National AI Strategy in 2021. This initiative sets out the UK’s strategic intent to guide action over the next ten years across three pillars: planning for the long-term needs of the AI ecosystem, ensuring AI benefits all sectors and regions, and getting national and international governance of AI technologies right. So far, the National AI Strategy has led to the publication of The Future of Compute Review, an AI regulation policy paper, which prompted a full range of stakeholder feedback.  

In addition, former Prime Minister Sir Tony Blair and William Hague, the former leader of the Conservative Party, released a joint report, A new national purpose: AI promises a world-leading future of Britain, which described AI as “the most important technology of our generation.” The report also indicated that the UK could pioneer the deployment and use of AI technology in the real world, “building next-generation companies and creating a 21^st-century strategic state”. Strategies on how to achieve this include launching major AI talent programs, requiring generative AI companies to label synthetic media, and building AI-era infrastructure as a public asset. 

In early 2023, the UK government announced the building of a £900 million supercomputer to drive the country’s AI research and innovation capabilities that will be housed at the University of Bristol. The government also plans to invest £100m to position the country as a key player in producing AI-powered computer chips. An order of up to 5,000 graphics processing units (GPUs) from Nvidia is already in the advanced stages.  

There are numerous government initiatives to help UK companies fund solutions around AI development. For instance, the Fairness Innovation Challenge allows companies to apply for up to £400,000 in government investment to produce solutions to combat bias and discrimination in AI systems. This is in response to the challenges companies are facing with AI bias, such as inadequate access to data on demographics, and ensuring potential solutions meet legal requirements. According to a report by the Bank of England, AI bias could have serious repercussions in the finance sector, especially when incorrect data points affect mortgage lending practices.  

 

3. AI and machine learning are tech leaders’ priorities to drive innovation and efficiency 

AI is unsurprisingly a strong investment area among IT and digital leaders in the UK. A survey conducted by Info-Tech found that over 30% of IT leaders have investments in AI and machine learning in their organizations. When it comes to security tools, 79% of IT leaders favor those involving AI and machine learning functions (CyberEdge).  Another important finding from the survey is that AI is the fastest-growing technology for investment in 2023 and is the second most popular technology after cloud computing.  

Speaking of the cloud, AI capabilities are key to further cloud implementation. Both AI and machine learning are vital to accessing large volumes of data and scalability through the cloud. 

According to a 2023 study by Tata Consultancy Services: 

• 74% of respondents have invested in AI and machine learning over the last two years to propel cloud innovation 
• 78% plan to invest in the next year or two 
• 80% reported that AI tools have boosted employee productivity, decision-making, and process efficiency 

According to the FIS Global Innovation Report, generative AI is a priority for many UK business leaders with 60% already adopting the technology and planning to increase spending within the next year to remain competitive. 

In April 2023, a report on post-pandemic economic growth by the House of Commons Business, Energy, and Industrial Strategy Committee highlighted the potential impact of AI on employee productivity in the UK. Based on original research by Deloitte, notable findings include that AI could boost UK labor market productivity by 25% by 2035. Additionally, research by EY found that senior business leaders in the UK are keen to develop AI technologies to spur economic growth and are looking for guidance due to the country’s complex AI regulation and compliance landscape.  

 

4. The UK government is tackling AI risks amid employee pushback on workplace usage   

Despite AI’s widespread adoption and visible benefits, AI has been officially classed as a security threat to the UK for the first time following the publication of the National Risk Register (NRR) 2023. There has also been pushback from employees on the usage of AI in the workplace.  

According to Randstad UK: 

• 3 in 5 workers want AI banned from the workplace 
• 60% of workers would support a government decision to ban AI from the workplace 
• 37% would not use AI tools for work-related tasks, while 27% would consider it 
• 2 in 5 workers said they were already using AI tools at work 

A separate study by Forbes Advisor found that the top AI concerns among UK citizens were:  

• Dependence on AI and loss of human skills (42%) 
• Autonomous AI systems making decisions without human intervention (39%) 
• Job displacement and impact on employment (39%) 

In addition, only 45% of employees in the UK are confident that their organization’s risk management processes can support enterprise-wide generative AI integration (Avanade). Trade Union’s Congress (TUC), the UK’s biggest trade union, has created a task force to draft urgent legislation to protect workers’ rights and ensure jobs are not lost to AI. The task force aims to publish and lobby the AI and Employment Bill in 2024.  

The UK government has been proactive in developing frameworks and strategies around AI use to mitigate risks and increase transparency. For instance, the creation of the Frontier AI Taskforce to develop safe AI practices for the future and ensure the UK has sovereign capabilities and broad adoption of safe and reliable foundation models. The UK government will also host its Global AI Safety Summit in November 2023 where it will announce an international AI advisory group and kickstart international discussions on AI regulation. Leading up to the summit, the government body, UK Research and Innovation (UKRI), declared that it will invest £37m in AI projects to help businesses and research organizations pioneer AI and machine learning solutions.  

Additionally, the UK’s House of Lords Communications and Digital Committee opened its inquiry into large language models (LLMs) in September 2023. Issues that were covered in the session include how LLMs differ from other forms of AI and their evolution over the next three years, the role and structure of the Foundation Model Taskforce, and the government’s role in responding to the opportunities and risks presented by LLMs.  

 

5. AI has been adopted by the UK’s largest corporations, from Unilever to Rolls-Royce 

Let’s look at notable use cases across different industries in the UK: 

• Consumer Goods: Unilever has harnessed GPT API to create AI tools that minimize food waste, auto-generate product listings, and filter emails sent to customer service, sorting spam from legitimate messages. AI tools reduced the amount of time customer service agents spent responding to customers by more than 90%. 
• Aerospace and Defense: Rolls-Royce has adopted predictive analytics and machine learning to reduce aircraft engine emissions and optimize maintenance, enabling customers to keep planes in the air longer. AI-powered processes have helped Rolls-Royce extend the time between maintenance for some engines by up to 50% and save 22 million tons of carbon.  
• Beauty and Cosmetics: Estée Lauder applied AI, augmented reality (AR), and machine learning capabilities to develop a Voice-enabled Makeup Assistant (VMA) to support visually impaired individuals in selecting suitable products. The VMA utilizes AI technologies to analyze makeup on the customer’s face and uses voice guidance to help customers create their ideal look.  
• Retail: Marks & Spencer has deployed cutting-edge computer vision technology in over 500 of its stores. Using handheld devices with built-in AI, store associates can capture images of products on shelves and compare them to store-specific planograms in real time. This innovative approach ensures a well-organized and customer-friendly shopping experience. 
• Finance: Nationwide Building Society (NBS) uses AI to create synthetic data that is statistically similar to real data but does not contain any personally identifiable information. This allows NBS to share data with vendors for validation and other purposes without compromising customer privacy. By using synthetic data, NBS has been able to reduce the time needed to supply data for vendors from six months to three days.  
• Healthcare: KPMG developed a machine learning algorithm to predict which patients were likely to breach the 4-hour waiting time target in A&E, and to identify ways to reduce waiting times. The algorithm was trained on anonymized patient records and dynamic data about hospital operations. The algorithm was able to successfully identify 79% of patients who would breach the 4-hour waiting time target at the point of arrival. 
• Manufacturing: ENEL partnered with AVEVA to develop an AI solution to help reduce greenhouse gas emissions and meet sustainability targets. The AI solution identifies risks within ENEL’s power generation fleet and provides instructions on how to mitigate those risks, minimizing the impact on major assets and production operations. The AI solution has detected dozens of issues, enabling ENEL to improve operational efficiency, lower maintenance costs, and ensure maximum power generation. 

 

Although there are numerous governmental initiatives, frameworks, and discussions on AI use, there is currently no comprehensive law governing the deployment of AI for UK businesses. Some clarity was given in a policy paper titled A pro-innovation approach to AI regulation that suggests an alternative approach to AI governance by only regulating AI when needed. However, the government is committed to staying ahead of AI developments and working with stakeholders to develop effective regulations to minimize risks and spur AI innovation.