Is the UK IT industry a frontrunner in artificial intelligence globally?

It’s no secret that UK Prime Minister Rishi Sunak aspires for the country to lead the world in artificial intelligence (AI) development.

“That midsize country happens to be a global leader in AI… you would be hard-pressed to find many other countries other than the US in the Western world with more expertise and talent in AI,” he said in response to a reporter during a springtime visit to Washington, D.C.

In order to further his goals, Sunak announced that the first-ever worldwide AI conference will take place in November 2023 at Bletchley Park. This initiative aims to establish the UK as a leader in the discussion around the creation and regulation of AI software.

This raises the question: is UK tech truly at the forefront of AI globally? If so, what does this signify for the United Kingdom as a whole?

The five elements of a healthy AI environment.

Five elements are taken into account in MIT’s model of an innovation ecosystem: corporations, universities, risk capital, entrepreneurs, and government. The fast changing field of artificial intelligence is driven by innovation, and countries that can develop their AI skills and technologies stand to gain significantly economically. In light of this, the MIT model provides a prism through which to evaluate the UK’s standing in its ecosystem for AI technologies.

Capital at risk.

Venture capital (VC), which is used to support innovative technological companies in the AI sector, is the best representation of risk capital. Based on a deal analysis of £37.4 billion in venture capital funds deployed globally starting in 2023, the United States is evidently leading the way. This is hardly surprising given that the US, and especially Silicon Valley, are the world leaders in this field.

Nonetheless, the UK holds the second position, drawing the third largest and second-highest amount of funding out of 5,203 deals. The UK has created a gap between itself and other major economies, such as Israel, Japan, France, and Germany, even while the distance to the US is evident and significant.

Business.

BigTech’s vast financial resources have fueled advancements in AI. A response to worries that the BigTech firms’ resources and research would hoover up all the profits inside their walled garden was the non-profit OpenAI, the company that created ChatGPT.

In the innovation ecosystem, large firms do have a significant role to play. BigTech companies with headquarters in the US continue to have a presence throughout the world, including the UK. For instance, Google acquired DeepMind in 2014, a UK startup at the forefront of AI research, and it still has its primary campus in London. These companies support research and engineering teams that are leading the way in artificial intelligence by partnering with universities (see below).

Over 3,000 active UK AI enterprises, including these corporates, were identified by the UK government’s own evaluation in 2023; together, they generated over £10 billion in AI-related revenues. An analysis by the UK government shows that over 50,000 people are employed in AI. To put this in perspective, the NHS employed 301,491 nurses and 121,813 doctors as of January 2021.

To promote Sunak’s vision of the UK as a global participant, the government will want employment to increase, and many of these individuals will be employed within the global AI teams of BigTech.

College.

Universities play a critical role in an ecosystem of AI innovation since they conduct cutting edge research and educate the leaders of tomorrow.

Oxford and Cambridge, two UK colleges, are among the top 20 academic institutions using AI, according to Edurank’s analysis. The remaining three universities outside of the US are Nanyang Technological University in Singapore, University of Toronto in Canada, and Shinghua University in China. The Edurank top 40 includes University College and Imperial College.

The UK is home to the two top academic AI institutes in Europe, both of which have a track record of generating extremely profitable spin-outs in the country, DeepMind being one well-known example. The top three universities in Times Higher Education’s wider evaluation of international universities are Oxford, Harvard, and Cambridge. The universities in the UK are a strong point.

Business owner.

In the UK’s tech industry, the spirit of startups appears unabated. If growth keeps up its current pace, the number of new technological incorporations in the UK during the first half of 2023 is expected to surpass the numbers from 2022. 24,437 technology businesses have been incorporated so far this year, according to an RSM analysis of businesses House statistics. This represents 53% of the 46,474 incorporations in 2022. Data on recent tech incorporations in the UK indicates that the sector has significant room for entrepreneurship.

It would be prudent for the UK to look at guaranteeing healthy immigration if it were to follow the US in artificial intelligence. Foreign talent has been nurtured in Silicon Valley before. According to a National Foundation for American Policy research from 2022, more than half of the 582 US start-ups valued at $1 billion or more have at least one immigrant founder. Of these 319 businesses, 48%—including Stripe, Bex, and Instacart—were established in the Bay Area.

According to RSM’s study on immigration and technology, 54,000 foreign workers applied to work in the UK’s technology sector and moved there in 2022. Since 2017, the number has gone growing annually. While not all of these professionals will be drawn to AI companies, some will. It is beneficial to have a healthy level of skilled immigrants. Expert migration enriches the larger ecology by introducing new and creative ideas. And this is especially crucial in the technology industry, since breaking new ground is what makes it unique.

Authorities.

In order to create regulations in this emerging field, the government is essential. According to government whitepapers on AI policy, the UK will give innovation in this field top priority. Many have referred to EU draft law and accused it of being burdensome to the point of inhibiting innovation as the UK economy continues to navigate a post-EU environment. Here, finding the right balance will be crucial.

Companies are likely to be drawn to regulatory environments where they perceive room for growth. Across all industries, 64% of middle market company leaders support regulations. Fifty percent of middle market CEOs in the UK think that risk mitigation and innovation promotion need to coexist in harmony. Importantly, just 10% supported a schedule with minimal intervention. Here is where the UK government will need to set the proper policies.

As regulation spreads to new areas, it faces more difficulties. Tech platforms who wish to offer end-to-end encryption are not fond of the UK’s own online safety measure. In this instance, Meta believes that the proposed legislation is so at odds with their goals that, should it become law, they will shut down WhatsApp, their messaging service.

Government funding is also essential. Since 2014, the government has spent £2.3 billion on AI, but more will be needed. Given that UK firms and researchers are unable to obtain computing power, the government may need to take a reactive approach. In late 2023, news surfaced that over £100 million had been set aside for the purchase of computer processors. The National Security and Investment Act was launched to safeguard national security while maintaining the UK’s openness to AI. The UK has also made available on its website a national AI strategy that includes funding for up to 2,000 additional scholarships for master’s programs in AI and data science conversion, a review of scale-up, high potential individual, and global business mobility visas, the addition of AI data scientists to the National Careers service profile, and more.

What comes next?

In the area of artificial intelligence, the UK has good reason to claim that it is ahead of the rest of the globe including the US. The UK is well-positioned to compete on the international scene, with a prime minister who is willing to promote the value of artificial intelligence and a developing ecosystem.

There will surely be difficulties along the way, and advancements will be achieved working closely with foreign partners. Although the UK government cannot bridge the gap with the US overnight, it can take constructive action by enacting laws that incentivize AI company innovation and promote the lawful immigration of top people.

For the UK, the benefits of taking the lead globally in this field may be enormous. There might be a significant increase in employment and growth if AI companies decide to locate their operations and development centers in the UK. A robust UK AI tech ecosystem can boost the country’s economy overall as AI is implemented and integrated into many sectors of the economy.

When it comes to establishing frameworks and regulations in the debate over the ensuing decades, a thriving AI ecosystem will give the UK government legitimacy on the international scene. Mr. Sunak has designated it as a top priority for this reason, and it is for this reason that the AI strategy—as well as more—must be implemented. Many will be watching for more government pronouncements at Sunak’s Global Summit in November 2023.