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Prime Minister Sir Keir Starmer has promised to make Britain the “best state partner” for artificial intelligence companies in the world as he tries to boost the UK’s growth prospects against an ominous economic and political backdrop.
Starmer, writing for the Financial Times, claimed that Britain’s “values of democracy, open trade and the rule of law” made the UK a natural place for AI companies to invest and pledged to remove planning restrictions and create “new AI growth areas”. .
“I am determined that the UK will become the best place to start and grow an AI business,” he wrote on Monday. “I know that growth in this area cannot be led by the state. But it is absolutely the duty of the government to ensure that the right conditions are created.”
Starmer hopes to bounce back after a week in which his economic plans were hammered by markets, leaving chancellor Rachel Reeves potentially faced with having to cut spending or raise taxes to keep her fiscal plans on track. proper.
Last week, Britain’s borrowing costs climbed to near 16-year highs amid persistent inflation and fears that Reeves’ tax hike budget had contributed to stagnant growth.
The UK has a mixed record in fostering the AI industry. It has struggled to remain competitive with Silicon Valley-based start-ups, with British companies raising just a fraction of the $56 billion invested globally in AI seed groups last year, according to PitchBook.
The previous Conservative government and the current Labor administration have also struggled with how to aggressively regulate the fast-growing sector. In recent years, British regulators such as the Competition and Markets Authority have been routinely attacked by US executives for slowing the pace of deals in the sector.
London is home to pioneering AI group DeepMind, which was founded in 2010 but was sold to Google four years later and now forms a core part of the search giant’s AI strategy.
Big tech companies like Meta and Apple have also been slower to roll out their latest AI services in the UK than in their home market, and some in the tech industry are concerned that the Markets Act Digital, Competition and Consumers in the United Kingdom, adopted last year. , may bring similar restrictions in the EU.
Starmer’s bid to position the UK as a global force in AI also comes after he has faced a series of inflammatory accusations in recent weeks from Elon Musk, one of the industry’s most powerful figures, over his record in handling sexual exploitation of children when he was president. of the prosecution.
As Starmer seeks to attract more investment from the artificial intelligence industry, Reeves, who returns on Monday from a visit to China, will this week woo regulators to tell them to be more ambitious in removing barriers to growth .
The sense of economic gloom was compounded by a survey of UK chief financial officers by Deloitte, which showed business optimism fell to a two-year low in the fourth quarter.
The survey found that a net 26 percent of finance chiefs reported feeling more pessimistic about their business prospects than three months ago, marking the first time sentiment has dipped into negative territory since the second quarter of 2023.
Finance chiefs said cost-cutting would be their most likely response to Reeves’ £25bn increase in employers’ national insurance contributions.
Deloitte said UK corporations expected to cut capital spending, discretionary spending and reported the sharpest drop in employment expectations since the pandemic. However, the survey found that confidence was well above the lows seen in 2020 and 2022.
In early trading on Monday, the pound weakened 0.4 percent against the dollar to $1.2156, the lowest level since November 2023. The 10-year walnut yield rose 0.04 percentage point to 4.87 percent.
Mel Stride, the shadow chancellor, told the BBC that “business confidence is hitting the floor because of the actions the government has taken” and insisted Reeves should have canceled her visit to China to calm the markets.
But an adviser to the chancellor said: “Is he seriously saying she should have canceled the trip to stay at home over the weekend to address a closed market? It would rightly have been seen by the markets as panic.”
A Starmer ally said any suggestion that Reeves’ position was under threat was “absolute rubbish”.
Starmer continues to believe that Reeves’s October Budget, which sought to stabilize public finances and support public services with a £40 billion tax increase, will pay off in the long run despite market turmoil.
Reeves is planning her speech on economic growth, but it has been postponed until after her trip to the World Economic Forum in Davos later this month.
On Thursday, she will convene eight regulators to explain what they are doing to boost growth. In her Mansion House speech in November, she told observers: “The UK has been regulating for risk but not regulating for growth.”
With additional reporting by Tim Bradshaw in London
