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Prime Minister Keir Starmer has pledged to make Britain the “national partner of choice” for the world’s artificial intelligence companies, in a bid to boost Britain’s growth prospects against an ominous economic and political backdrop.
Writing in the Financial Times, Starmer argued that Britain’s “values of democracy, open commerce and the rule of law” make the country a natural investment destination for AI companies. He vowed to wipe out restrictions and create a new “AI growth zone.” .
“I am confident that the UK will be the best place to start and scale an AI business,” he said on Monday. “We know that growth in this sector cannot be achieved by states, but it is definitely the job of governments to ensure that the right conditions are in place.”
Mr Starmer is back in the lead after a week in which his economic plans were beaten by markets and Chancellor Rachel Reeves could face the need to cut spending or raise taxes to get her fiscal plans back on track. I want to.
Last week, Britain’s borrowing costs rose to near a 16-year high on persistently high inflation and concerns that Reeves’ tax hike budget is contributing to stagnant growth.
The UK has a mixed track record in developing an AI industry. The company has struggled to remain competitive with Silicon Valley-based startups, with British companies only investing a fraction of the $56 billion they invested globally in Generative AI Group last year, according to Pitchbook. Not procured.
The previous Conservative government and the current Labor government have also struggled with how to proactively regulate the fast-growing sector. In recent years, UK regulators such as the Competition and Markets Authority have been regularly attacked by US executives for slowing down the pace of deals in the sector.
London is home to pioneering AI group DeepMind, founded in 2010 but sold to Google four years later and now at the heart of the search giant’s AI strategy.
Big tech companies such as Meta and Apple have also been slower to roll out cutting-edge AI services in the UK than in their home market, and some in the tech industry are under pressure from the UK’s Digital Markets, Competition and Consumer Act, which was revised last year. I am concerned that it has been passed. , could impose similar restrictions on the EU.
Mr Starmer’s bid to position the UK as a global force in AI comes after one of the industry’s most influential figures, Elon Musk, over his record tackling child sexual exploitation when he was chief secretary. , which comes amid a series of inflammatory allegations in recent weeks. of the Prosecution Service.
Mr Reeves, who returned from a trip to China on Monday, said this week he will “bring in” regulators and tell them to be more ambitious by dispelling barriers to growth, as Starmer seeks to attract more investment from the AI industry. I plan to.
A Deloitte survey of UK chief financial officers showed business optimism fell to a two-year low in the fourth quarter, further worsening the economic gloom. .
According to the survey, a net 26% of finance executives say they are more pessimistic about the outlook for their company’s business than they were three months ago, marking the first time sentiment has fallen into negative territory since Q2 2023. It shows.
Finance chiefs said the most likely response to Mr Reeves’ £25bn increase in national insurance contributions for employers was to cut costs.
Deloitte said British businesses expected to cut capital spending and discretionary spending, reporting the steepest fall in employment expectations since the pandemic. Nevertheless, the survey found that confidence remains well above the lows of 2020 and 2022.
In early trading on Monday, the pound fell 0.4% against the dollar to $1.2156, its lowest since November 2023. The yield on 10-year government bonds rose 0.04 percentage points to 4.87%.
Mel Stride, the shadow chancellor, told the BBC that “business confidence has fallen to the ground because of the measures the government has taken” and that Mr Reeves’ trip to China should have been canceled to calm the market. insisted.
But one of the prime minister’s advisers said: “Is the prime minister really saying that weekend shelter-in-place travel should have been canceled to deal with market closures?” Naturally, the market would have seen it as a panic. ”
Supporters of Mr Starmer said suggestions that Mr Reeves’ position was under threat were “absolute nonsense”.
Mr Starmer continues to believe that Mr Reeves’ October Budget, which aimed to stabilize public finances and strengthen public services with a £40bn tax rise, is justified in the long term despite the market turmoil. There is.
Mr. Reeves is planning his own speech on growth, but it has been postponed until after a visit to the World Economic Forum in Davos later this month.
He plans to summon eight regulators on Thursday to explain his efforts to boost growth. inside her Speech at Mansion House In November, she told the watchdog: “The UK has been regulating for risk, but not for growth.”
With additional reporting by Tim Bradshaw in London
