Rachel Reeves’s attempt to put AI at the centre of the UK’s growth strategy has drawn a broadly positive response from business, yet also exposed a series of gaps that could limit how quickly that ambition translates into real economic gains.
In her Mais Lecture, the chancellor will pledge to deliver the “fastest AI adoption in the G7”, backed by £2.5bn in funding for AI and quantum computing, alongside closer economic ties with the EU and a renewed focus on regional growth.
Reeves argues Britain “cannot afford to stand still” as the tech accelerates, positioning AI as a core lever to address the UK’s long-standing productivity problem.
But while few in the industry dispute the direction of travel, there is less consensus on whether the underlying conditions are in place to deliver on it.
Richard Thompson, chief executive of digital transformation firm ANS, said the funding “signals serious intent”.
However, “turning that ambition into economic growth will depend on how effectively organisations can actually adopt and scale AI”, he added.
“Rapid adoption without the right foundations carries real risks. This investment must be matched with the skills, infrastructure and guidance organisations need to deploy AI securely and effectively.”
That gap between adoption and execution is already visible inside businesses. Indeed, recent research by UnlikelyAI found that employees are spending almost as long checking and verifying AI outputs as they are using the tools themselves, eroding productivity gains.
Across bigger businesses, that verification burden is estimated to cost £29bn a year, with issues around accuracy and consistency continuing to undermine trust in AI systems.
More than half of respondents reported frustration when validating outputs, while others cited either “AI burnout” or “analysis paralysis” linked to uncertainty over whether results could be relied upon.
Structural gaps beyond adoption
Industry figures have also argued that the UK’s AI challenge is as much structural as it is technological.
Barney Hussey-Yeo, chief executive of fintech unicorn Cleo, said the government’s focus on investment and international alignment does not address a more persistent issue: the UK’s difficulty in scaling companies domestically.
“Investment in AI and closer ties with the EU isn’t enough to keep tech companies in the UK,” he said.
“We’re not short on ideas, talent or early-stage capital… but when founders come to list, they look abroad as the London Stock Exchange isn’t fit for purpose.”
He pointed to deeper capital pools over the pond and stronger incentives for high-growth firms as key drivers behind companies choosing to scale elsewhere.
“As the global economy enters an AI-driven growth cycle, scale is decisive… without aligned venture capital, pension fund participation, public funding and a listings regime that rewards ambition, the UK will continue to export the value it creates,” he added.
Those factors raise questions about whether Reeves’ strategy, which leans heavily on public investment and adoption, can fully address the capital constraints that have historically limited the UK’s ability to retain high-growth tech firms.
And at the same time, unresolved policy questions risk adding further uncertainty.
Vinous Ali of Startup Coalition and Antony Walker of techUK said: “It is critical that [the UK] produces a pro-innovation framework which at minimum keeps pace with our international competitors”.
“Without one, British startups are put at a disadvantage, and the UK economy loses out as investment and innovation flows elsewhere.”
They added that competing jurisdictions, including the US, Japan, and parts of the EU, have already established clearer or more permissive frameworks for AI development, while the UK has yet to settle on a definitive approach.
“The real choice is whether Britain leads the AI era, or watches others do so”, they added.
A step in the right direction
There is, however, broad agreement on the potential upside if those gaps can be addressed.
Neil Sawyer, managing director at HP Northern Europe, said AI could become “one of the most powerful drivers of economic growth in the coming decade”, and described the government’s focus on adoption as “a welcome signal”.
But: “Unlocking its full value will depend on equipping workers with the right tools and training, so that AI becomes a partner in productivity rather than a source of uncertainty”, he said.
While the UK is not short of AI activity, early-stage funding or technical capability, what remains less certain is whether the country can convert that into sustained productivity gains and long-term growth.
