Can the UK compete with tech superpowers to lead in AI?

UK AI sector Image credit: I T S via Shutterstock

Artificial intelligence (AI) has exploded into the mainstream thanks to tools like ChatGPT. The economic and geopolitical stakes are high as countries compete in a fresh race to advance their AI industries. Can the UK be a world leader in AI, as the government intends?

While the UK has a history of trailblazing tech innovation, AI is a crowded market. Prime Minister Rishi Sunak isn’t alone as a political leader with the ambition to create a world-leading AI sector.

The government has demonstrated its support for British AI for several years now – see the National AI strategy of 2021. However, the viral success of Microsoft-backed OpenAI and others has created a fresh sense of urgency.

Rather than being contained to a single strategy, AI policies have made appearances across various government communications in recent months.

This year’s Spring Statement was a clear demonstration from the chancellor that the government intends to ride the latest AI wave.

In it, Chancellor Jeremy Hunt promised greater funding for both AI and quantum computing, an AI sandbox to test new technologies, an annual prize for AI innovation, and a robust regulatory framework to balance innovation with safety.

Strong foundations

The UK has a solid history of scientific and technological innovation. It has some of the world’s most respected educational institutions, with the University of Oxford, University of Cambridge and University College London producing a healthy pipeline of AI researchers and spinouts.

According to the government’s artificial intelligence sector study, over 50,000 people in Britain work in the field and the industry contributed £3.7bn to the economy last year.

But AI is far from a one-horse race. To come out on top, the UK will need to compete with the deep pockets and vast resources of the US and China, as well as dozens of developed international tech communities all vying to define the next generation of AI technologically, economically, and regulatorily.

Government funding 

Earlier this year the government announced £2m to fund new AI tech trials, a figure that Ian Wood, head of technology UK&I at Veritas Technologies, described this figure as a “drop in the ocean compared to the figures injected by behemoth technology firms like Microsoft and Google”.

Wood added: “Initial funding for AI startups typically runs at £1m to £2m and then to scale up in the real-world costs millions more.”

In addition to this, the government has allocated £1bn in funding for the next generation of supercomputing and AI research. This will be split as a £100m generative AI taskforce, and £900m to expand compute capacity.

However, the UK’s AI spend still lags behind the US, China, the EU and some of the larger tech companies. Microsoft, for example, announced a $10bn investment into OpenAI at the start of the year.

Despite this, Wood said that overall it’s a “clear signal of the UK government’s intent to take a leadership position” and added that whilst “large players such as Microsoft and Google can fund R&D at these levels, grassroots innovation will benefit from being able to leverage private funding with smaller amounts of Government support”.

Private AI investment

There is, of course, still plenty of private investment activity for UK AI startups. Since 2016, UK AI companies have secured £18.8bn in private investment. From January to October last year, British AI startups raised a record $3.6bn.

While there has been an overall slowdown in funding, AI companies continue to attract capital. The £2m round for Intelligent AI and the £17m round for machine learning specialist Seldon are just some of the examples this year.

For Steve Salvin, CEO of AI startup Aiimi, becoming an AI leader will depend heavily on the commercialisation and protection of the government’s investment.

“All this investment comes to nought when giant international tech firms can swoop in and eat our lunch, or, as is often the case, buy up smaller firms, decimate the competitive landscape and consume IP that was developed and funded here.”

Salvin called for a “concerted effort to ‘level up’ opportunities for smaller firms”.


Sunak has made it clear that he wants the UK to lead and influence global AI regulation. During a recent meeting with world leaders for the latest G7 summit in Japan, he said that regulatory “guardrails” are needed for the latest wave of AI.

The UK took its first major step in AI regulation with the release of a sector-specific white paper back in March.

This was, however, fairly limited in terms of actionable policies and instead acted as more of a statement of intent.

“The UK should take a more robust stance on issues such as AI alignment and transparency,” said Colin Hayhurst, CEO of the privacy-based search engine Mojeek.

Hayhurst acknowledged that the white paper recognised many of the key issues that need attention but said that “recognition of these major concerns is not satisfactory”.

He said the approach “risks leaving the UK exposed to the US and China, as their governments and Big Tech companies, determine the road forward in AI”.

“The government should be demanding transparency of powerful models now and seeking to curb the control held by these unstated organisations,” he added.

Is it realistic?

The government’s rhetoric has been bold, from becoming the “next Silicon Valley” to a “science and technology superpower”.

But are the UK government’s AI sector goals feasible?

“The government’s ambition is entirely realistic – the UK has an incredibly strong AI startup ecosystem that it should be both proud of and focused on nurturing and growing,” said Camilla de Coverly Veale, policy director at the Coalition for a Digital Economy (Coadec).

She applauded the “sectoral approach” of the AI strategy as “different uses will need different treatments”, citing AI for medical diagnostics versus AI that supports a B2B system.

The Coadec policy director acknowledged it will take time to perfect the UK AI regime, and so appreciated that the strategy “clearly sees this as a work in progress given the pace of change is so rapid”.

Coverly Veale added: “AI technology will be transformative – but consumers and the wider public have to trust its use – and I don’t think that will happen if the strategy was focussed on making it harder to innovate and improve.”