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What’s standing in the way of the UK being an AI superpower?

Artificial intelligence (AI) could bring a big economic boost to the UK, says report, but there are still barriers to overcome

Fast adoption of artificial intelligence (AI) could help the UK to achieve its goal of becoming a tech superpower – but the use of the technology is still patchy across regions and industries, and there are plenty of barriers to overcome.

Research commissioned by Amazon Web Services (AWS) called 2023 a “breakout year” for AI adoption in the UK, with the number of companies adopting AI increasing by 31% over 2022.

It said 39% of businesses were “consistently” using AI technology in their daily operations. Out of the companies using AI, 70% said they are using large language models (LLMs) or generative AI.

The technology has found a varied set of uses: 62% of businesses reported that they are using it to interpret or generate human language, 46% are using it to detect fraud or anomalies, and 46% said they are using it to make data-based predictions, decisions, or forecasts.

The report further stated that 86% of UK businesses that have already adopted AI reported enhanced automation and efficiency, 79% have experienced cost savings, and 64% saw increased revenues.

“These results show just how powerful technology is as a driving force for growth across the UK. Innovations in AI, cloud, quantum and more will no doubt continue to push the boundaries of what is possible for British businesses,” said Saqib Bhatti, minister for tech and the digital economy.

Large businesses – those with more than 250 employees – have adopted AI at four-times the rate of small businesses with less than 10 staff, at 60% compared to 15%. A mere one in four of these small businesses could name a potential practical use case for AI in their businesses.

And while UK businesses have increased their use of AI overall, that adoption is very uneven across nations and regions.

Three-quarters of business AI adoption is concentrated in four regions: London (23%), the South East (21%), the North East (18%), and the North West (13%).  

​If the regions with the lowest digital adoption – currently Wales and the South West of England – were able to reach the average UK adoption of 39%, this could generate £2.48bn for the UK economy per annum, the report claimed. The South West accounted for just 2% of the adoption of AI in the report.

“Closing these divides presents an opportunity for the UK to boost the economic potential of advanced digital technologies further,” it said.

Adoption of AI is also uneven across industry sectors, the survey found, with two-thirds (68%) of usage concentrated in five sectors: technology, telecoms, financial services, professional services and construction.

In other sectors adoption is low, although ambition may be high. The retail sector reported just 12% AI adoption, but 85% of retail organisations in the study expected AI to transform their sector. Similarly, while healthcare reported just 6% AI adoption in 2023, 88% of healthcare organisations expected AI to have a transformative effect.

The AWS report, carried out by Strand Partners, said that if the UK could boost the uptake of AI in the four sectors with the lowest digital adoption (these are agriculture, hospitality, healthcare and retail) to match the UK average, this could generate more than £8bn for the UK economy.

AWS argues that by adopting a broad wave of technologies across the regions and across many industries could add £520bn to the UK economy by 2030 – effectively adding around 20% to GDP.

However, it noted: “The spread of AI technologies is uneven across regions, industries and business size, and a lack of digital skills presents a significant barrier to the further adoption of AI, holding businesses back from unlocking further growth opportunities.”

The government certainly has ambitious plans for tech. Last year, it declared an aim for the UK to be a top three international “technology superpower” by the end of the decade, with AI, semiconductors and quantum computing among the critical technologies it wants to support.

Prime minister Rishi Sunak has said that he believes technologies such as AI will bring a transformation as far-reaching “as the industrial revolution, the coming of electricity, or the birth of the internet”.

The government also wants the UK to account for at least half of all new unicorns – companies worth more than $1bn – created in Europe by 2030, and for VC investment as a share of GDP to rise to the same level as in the US.

Amazon is making the optimistic case for the introduction of AI, but the real-world impact might be more nuanced, at least in the short term. While AI may create new jobs and enhance others, it also has the capacity to destroy them through automation.

While the UK may be keen to absorb the benefits of AI, it will also have to carefully navigate the economic and social impacts of what could be rapid and radical shifts in employment across many industries.

Getting all regions to adopt new technologies has been a familiar theme for many governments without huge amounts of success; one issue is the need for enabling technologies like the roll out of high-speed broadband and 5G particularly in rural areas that tend to lag behind.

But one of the biggest barriers to the adoption of new technologies is a lack of skilled staff. The UK government estimates that the digital skills gap costs the UK economy £63bn a year in lost potential GDP.

AWS found that businesses are struggling to hire people with good digital skills: only 13% said they find it easy to hire staff with good digital skills, while 29% said a lack of digital skills was an obstacle to their adoption of AI tools.

Firms estimate that it takes, on average, over seven months from posting a job vacancy to finding an employee with the appropriate digital skills.

In its fourth quarter results published this week, Amazon highlighted its own major investments in generative AI technologies, including Bedrock, an AWS AI service; Q, its generative coding assistant; and Rufus, a generative AI-powered conversational shopping assistant.

It is also working with a number of AWS customers to implement AI. In November, it said biotech company Amgen is expanding its work with AWS to create generative AI-based solutions to help discover, develop, and increase the manufacturing throughput of medicines.

Hospitality company Accor has also expanded its relationship with AWS to launch a generative AI Travel Assistant using Amazon Bedrock and Amazon SageMaker, which aims to enhance travel planning and booking, while reducing call volumes at Accor’s contact centre.

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