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Blighty newsletter: Britain’s advantage in the AI race

Britain's Prime Minister Keir Starmer visits University College London — Photograph: Reuters

Jan 14th 2025

Alex Hern, our writer on AI, explains where Britain might derive an advantage in the AI race

America has the money. China has the people. Europe would say it has the enlightened regulatory state. So what would make Britain a natural home for AI?

That’s the question at the heart of the British government’s multi-billion-pound pitch to the tech sector. And it’s a crucial one to get right: the only way to make the sums add up on Sir Keir Starmer’s plans for Britain is to burst out of the economic stagnation of the past decade into solid GDP growth. An AI boom could do that.

Almost as soon as he was in Number 10, the prime minister commissioned Matt Clifford, a venture capitalist, to produce a plan for enticing the industry—and its billions of pounds of investment—to Britain. Mr Clifford offered up the AI Opportunities Action Plan, a 50-point programme of “data libraries”, “growth zones” and “research resources”. The government announced on Monday that it would adopt the plan in full, save for some hesitancy on recommendations for wider visa access for graduates of top universities.

But if the intended impression is a government charging headfirst to an AI future, the reality has been more cautious. I understand that the plan was originally intended to arrive in November. Donald Trump’s victory, however, along with his subsequent threats of trade wars against anyone who over-regulates American companies, prompted a rethink.

Certainly, Mr Clifford’s plan as it has arrived is enthusiastic about the potential of AI, and the government somehow more so. On Monday Sir Keir told reporters that he expected productivity would double within five to ten years because of AI. Given the last doubling took 30 years, either it is an incredibly bullish prediction, or the prime minister was actually speaking about rates of growth rather than levels.

The plan’s key points include liberalising planning laws around data centres, creating a “national data library” to aggregate potentially valuable datasets the state holds and reworking public-sector procurement to focus on areas where AI can produce major gains. But one thing it leaves unsaid is the killer question: why Britain? What can the country offer to secure its place at the AI frontier? Can companies based here hold their own against San Francisco’s OpenAI?

Britain is the third-largest market for AI, Peter Kyle, Britain’s science secretary, notes. But the country’s welfare state is what makes it stand out, he says. The fuel for AI is data, and Britain’s datasets are “genuinely unavailable to pretty much any other country in the world”. Freed from the need to follow the EU’s regulations, Sir Keir added, Britain can offer a meaningful alternative for companies who might want to set up shop.

Tapping into that opportunity will provoke a backlash. As AI enthusiasm grows, so too does scepticism—particularly among Labour’s own supporters. Will the party have the stomach to see such a divisive plan through to completion? “We want to engage with everyone,” Mr Kyle says, but he is firm: under Labour, AI’s impact will be “universal”. With Britain’s monolithic health service, centralised bureaucracy and the remnants of a cradle-to-grave welfare state, Sir Keir has more chance than most leaders to make that happen. Whether he can make it popular is a tougher proposition.

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Blighty newsletter: Britain’s advantage in the AI race

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