Will A.I. Propel us towards Economic Recovery?
By Donna James, Research Director at Populus Select
There is a lot of noise about AI but will it help our sluggish economic performance?
Will AI help us grow?
It finally feels as though the UK may be on the cusp of a major economic and technological breakthrough. After years of uncertainty, a wave of optimism is beginning to sweep through the business community — fuelled by relative political stability, renewed global partnerships, and a surge of high-profile investment.
Prior to the budget Chancellor Rachel Reeves has struck a more upbeat tone in signalling a more constructive relationship between government and business. The mood is shifting from caution to more confidence, with major global firms once again looking to the UK as a serious hub for innovation and growth.
One of the most significant drivers of this optimism is the rapid acceleration of investment in artificial intelligence and digital infrastructure. Nvidia’s CEO Jensen Huang recently declared, “This is the week that I declare the UK will be an AI superpower,” following the announcement of a landmark £31 billion “Tech Prosperity Deal” between the UK government and leading US tech companies including Microsoft, Google, and Nvidia itself.
Microsoft’s $30 billion commitment represents its largest-ever investment outside the United States. $15bn of the amount is earmarked for capital expenditure in areas where datacentres are key components such as equipment, land and buildings for AI and cloud services. The other half will go on day-to-day operations such as research, sales and product development. Google has pledged an additional £5 billion for AI research and infrastructure. Nvidia, meanwhile, is partnering with British firm Nscale to build advanced AI data centres laying the groundwork for long-term technological capability and economic growth.
Closer to home, the Northeast continues to make headlines. The £100 million AI investment in Blyth adds another exciting dimension to the region’s economic renaissance. In Teesside, while plans for BP’s proposed hydrogen plant have recently been complicated by competing ambitions for an AI data centre, either outcome could deliver transformative benefits for local jobs, skills, and industry.
These developments arrive at a crucial time. UK productivity has lagged behind other advanced economies for over 15 years, but the combined momentum of policy reform, foreign investment, and cutting-edge innovation may finally provide the jolt the nation needs.
Questions remain about the impact of AI on the labour market, particularly for the young, and about the ability of British organisations to ensure they provide the necessary training and support to enable their employees to use AI to increase productivity.
However, one message is clear: the UK is back on the global investment map. If this spirit of collaboration and confidence continues, the long-discussed “turning point” for the British economy might just be arriving.