AI to boost UK economy by £400bn, says Google

AI could contribute up to £400bn to the UK economy by the end of the decade, according to a report released by Google.

The report noted that artificial intelligence could turbocharge productivity, which has been sluggish for many years. It also noted it could unlock new ways of working and help jobseekers get back to work.

Between 1974 and 2008, the UK’s productivity grew at an average rate of 2.3% a year, a much higher rate than the 0.5% growth between 2008 and 2020, according to National Institution of Economic and Social Research figures.

The economic boost brought by AI could be equivalent to an annual growth of 2.6%, creating £200bn in extra revenue for public services. This could overcome recent growth stagnation and improve macroeconomic conditions.

Whilst the news sounds positive, the implications for SMEs are not clearcut.

Where are our AI startups?

According to data from the Department of Science, Innovation and Technology (DSIT), 88% of the AI business population in the UK is made up of small (10-49 employees) or micro (1-9 employees) businesses.

However, despite representing a sizable majority of the AI business population, small and micro entities only make up 28% of AI’s economic contribution – 71% is generated by large firms.

This suggests funding and trust is skewed towards big established businesses that embody less investing risk.

“If AI is projected to bring billions to the UK economy, then why on earth aren’t our startups and SMEs getting the funding they need to take their business to the next level?,” questions Steven Mooney, CEO of FundMyPitch. “Time and time again reports show that UK entrepreneurs struggle to secure access to credible funding or even an independent valuation, in stark contrast to other markets.”

As a result, British startups with state-of-the-art AI products are having to look elsewhere for funding. Some have been bought out by US tech giants like Google or Microsoft, including Autonomy, DeepMind, and SwiftKey.

“A failure to get ahead of the game on AI will have disastrous consequences for the economy, so giving full financial backing to up-and-coming companies that are pioneering developments in this technology should be a top priority,” adds Mooney.

Making AI work for everyone

According to Salesforce research, only one in ten global workers have in-demand artificial intelligence skills. As AI continues to grow, employers need to think about upskilling their workforce.

“This shift is the most profound platform shift that any of us have lived through,” emphasises Debbie Weinstein, Google’s UK and Ireland Managing Director. “We are very conscious of the impact that this technology will have on people. Clearly there will be some jobs that will be lost, but also a whole new set of jobs that will be created.”

According to a Virgin Media study, data suggests that 21% of respondents said they needed digital skills to get a job with a higher salary and 31% believed they had been passed over for a promotion because of a lack of digital skills.

Paramjit Uppal, founder of AND Digital, says, “UK organisations are still failing to sufficiently upskill employees, and it is directly impacting business and wider economic growth.”

Democratising the growth of AI requires very conscious choices. Whilst AI can definitely boost productivity, it is paramount to spread out the gains by upskilling so that companies of all sizes can be part of the UK’s economic growth.