Investment in artificial intelligence will be decisive for the UK’s economic future.

At a time when productivity growth has been weak and global competition is intensifying, AI offers one of the clearest pathways to stronger, more sustainable growth.

Used effectively, AI can transform key UK sectors including financial services, healthcare, technology and advanced manufacturing, life sciences and the creative industries, raising efficiency while creating new, higher-value roles rather than simply replacing labour.

The economic case for AI extends well beyond individual firms. At a national level, AI can lift productivity across supply chains, improve energy and transport efficiency, and strengthen economic resilience. In public services, AI has the potential to improve healthcare outcomes, reduce administrative costs and allow limited public resources to be deployed more effectively. These gains matter at a time when fiscal pressures are high and demands on public services continue to rise.

However, plotting a credible pathway is not without its challenges.

The UK has certainly proven to lead in AI research and early-stage start-ups but appears poorer at late-stage scaling. Currently US firms raise many multiples of UK growth funds, and UK pension funds and investors can, at times, appear risk-averse, with prolonged due diligence

Here, energy prices can be high and planning approvals for data centres can be slow. Conversely, both the US and China treat computing power as strategic infrastructure.

Greater co-ordination and sense of urgency would also help considerably, with stronger links between universities, industry, defence, and public services. The US also has DARPA (its Defence Advanced Projects Agency) while China has its national AI Strategy. The UK must take the opportunity to develop its own national plan to unlock sovereign commitment over at least a ten-year period.

In both the US and China, government structures represent enormous AI customers. This includes for defence, healthcare and logistics. Conversely, public procurement in the UK can be risk-averse, slow and against start-ups. That must change if we are to properly ride the AI wave.

Another thing that must change is removal of regulatory uncertainty. AI investments can be enormous. The myriad recent policy changes, including reversals and U-turns, create uncertainty for investors. It is simply difficult to trust what will be regulated, when, how aggressively, and for how long.

While the UK produces world-class AI talent it struggles to hold on to it when the US and China can offer higher pay, better and bigger facilities, and more rapid scaling and impact. Unlike the US, we may also sometimes have a tendency to penalise failure, push founders towards exit strategies, and have less tolerance for companies that burn through money at scale.

Looking ahead, addressing these core issues and ensuring sustained investment in AI will be critical if the UK is to compete with the United States, China and leading European economies.

Success will depend not only on funding, but on skills, data infrastructure and clear regulatory frameworks that encourage innovation while maintaining public trust.

We have the talent, the quality of research, the start-up density, and we are ahead in ethical AI thought leadership, but without decisive action, the UK risks missing a once-in-a-generation opportunity to reshape its economic trajectory.

Emeritus Professor Joe Nellis is an economic adviser at MHA, with four decades of experience commenting on UK, European and global macroeconomic trends. MHA Partner Jason Mitchell is Head of Technology. MHA is one of the UK’s leading accountancy and business advisory firms.