Much of the immediate reaction to the Spring Statement has focused on cuts to public spending, and rightly so. In truth, however, I have some sympathy for the position the government is in. When Labour came to power last summer, it was no secret where their priorities lay – growth. And yet, with a chaotic geopolitical and fiscal sphere, progress on that front has – at best – been slow.
In light of the latest economic downsizing and the major investments into defence, AI and infrastructure announced last Wednesday, it is worth examining the government plans for growth and the areas where gains can potentially be made in the near term.
It is clear that the UK has the foundations of a world class tech ecosystem in place, and that attracting global investment is the fastest route to grow the economy. However, it’s also true that the UK’s regulatory landscape in its current form makes it difficult for companies to innovate and compete on the global scene.
To put the UK at the forefront of the global economy, a policy agenda which prioritises the sectors with the potential to be world leading is needed.
A silver bullet?
One of the key takeaways from the Chancellor’s statement last week is the clear belief in the power of AI to drive efficiencies and address the UK’s anaemic growth. AI has been long touted as one of the most transformative technologies of the century – Prime Minister Keir Starmer has stated previously it could deliver £45bn in savings annually, much of this from automating large swathes of the state.
Without question, AI has a critical role to play in the economy of this decade and beyond – from automating repetitive tasks to digesting large amounts of complex data. However, it certainly isn’t a silver bullet for growth, and many have cast doubt on the Prime Minister’s figure, with suspicions the technology may instead be used to cut jobs. For instance, Nick Davies, Programme Director at the Institute for Government think-tank, has warned that any suggestions of significant “cashable” savings are misleading.
Clearly, AI alone cannot solve the UK’s growth crisis. Investment in its development will need to be matched with funding to train the workforce how to use it effectively.
But at the same time, it’s encouraging to see such willingness from the government to invest in the AI infrastructure, and the tech sector more broadly as a vehicle for growth. Large US firms are already showing an interest in the UK’s tech scene, with companies such as Oracle, Vantage Data Centres, Nscale and Kyndryl all investing in the UK in 2025. They have committed to spending at least £14 billion on AI in the UK, creating more than 13,000 jobs. As the third largest AI economy behind both the US and China, on the face of it the UK is primed to capitalise on international investment in this space.
However, there is still some way to go. While the UK’s commitment to regulation on copyright and GDPR is sound in principle, it does make it a little more difficult for companies to innovate. There is some movement, with a proposal making its way through the House of Commons which will implement an ‘opt-out’ structure for any new intellectual property in terms of AI and copyright – time will tell if it becomes legislation.
Tech eggs in one basket
The UK’s commitment to AI is clear, but the Spring Statement left out the many other areas in which the UK has the potential to be world leading.
One of these is HealthTech. With over 304,200 professionals, it’s a vertical which contributes over £100 billion to the UK economy. With direct access to the NHS for piloting and scaling new technologies, a targeted focus on HealthTech has the potential to significantly boost the UK’s global competitiveness.
However, this vast potential also presents challenges for the HealthTech sector. As one of the largest single payer healthcare systems in the world, the NHS spends more than £10 billion on HealthTech products annually. And yet the UK is currently a net importer, importing £7.5 billion, while only £5 billion worth of HealthTech products are exported.
A mix of regulation, bureaucracy and public hesitancy mean the NHS is often accused of being slow when it comes to adopting new technologies. According to a recent survey, only around 50% of respondents are comfortable with AI performing administrative tasks in the NHS – and that number drops steeply when it comes to actual healthcare. A report by the Association of British HealthTech Industries in collaboration with Imperial College notes this relationship as one of the key barriers to British HealthTech success.
To make our HealthTech sector more attractive to the global market, a more collaborative approach to technological adoption in the NHS is needed, one which implements innovation-friendly regulation and embraces the advantages of a publicly funded healthcare system. To hear more detail about how exactly this can be done, come along to Tech London Advocates’ Healthtech Investor Showcase at Here East, Stratford on Wednesday April 2nd.
Certainty in uncertain times
Both AI and HealthTech are verticals in which the UK is either already a world-leader or primed to be one. In an economically uncertain time, the government needs to focus on areas where immediate progress can be made to secure the UK’s position as a global innovator.
The significant investment in and political backing of AI is good to see – but sectors such as HealthTech have an incredible amount of potential too, and shouldn’t be ignored. With the right reform to regulatory standards, and capitalising on the opportunities offered by the NHS, HealthTech – the ‘hidden gem’ of the UK tech sector – could have the same impact on economic growth and attract foreign investment as FinTech – the ‘jewel in the UK’s tech crown’ – in the 2010s.
The tech sector is primed to lead the way to economic growth – it’s time to help it do so.
