UK economy least likely to grow through AI

A study by the Economist Intelligence Unit (EIU) for Google has predicted that the UK will fall behind other leading economies unless the government makes radical changes to support AI (artificial intelligence) and data sharing.

The EIU Risk and Rewards report warned that the UK is expected to underperform compared with other countries in the analysis, in terms of both GDP and productivity growth.

Compared with the US, Australia, Japan, Asia and Developing Asia, the UK has the most to lose from poor public policy, said the report, with falls of 1.83% in GDP and 1.79% in productivity.

“For a number of potential reasons, including Brexit and the diminution of the highly productive financial services sector, the baseline forecast is for the country’s productivity to be negative between now and 2030,” the report said.

Between 2016 and 2030, productivity in the UK (measured in billions of dollars per million man-hours worked) is expected to decline from 0.045 to 0.041, with a compound annual growth rate (CAGR) of -0.62%.

The EIU’s rationale for the UK’s poor performance is based on falling productivity in line with recent performance. The country’s struggle with poor productivity has long been a top concern for economic policymakers, the EIU said.

The report presented three possible scenarios for AI adoption. Even in the best case, where AI complements human productivity – Scenario 1 in the EIU report – the UK’s growth in terms of GDP remains stagnant while the US, by comparison, grows at a CAGR of 1.59%, the report said.

In Scenario 2, which presents a more strategic and policy-driven model for incentivising AI research and adoption, the UK’s GDP is set to grow the least of all countries assessed in the report.

Overall, the EIU forecast that if the UK does not take enough action to support AI initiatives, the country’s economy will be US$420bn smaller in 2030 than it was in 2016.

At the World Economic Forum last month, prime minister Theresa May reiterated plans announced in the government’s industrial strategy to create a national research centre for AI to foster and retain research talent. May said the key to harnessing technology the right way is to ensure people are equipped with the skills they need to use digital technologies, and ensure industry and government work together on this. “We can’t sit back and leave it to the labour market,” she said.

The EIU warned that labour costs will affect AI investment. Quoting projections from the 2016 OECD, the report said 9% of jobs will be completely taken over by technology in the next two decades, with a further 25% having around half their tasks automated.

In the report, Jerry Kaplan, futurist and fellow of the Stanford Center for Legal Informatics, said: “Whether you make someone more productive or replace them completely, you can do more work with fewer workers. Both put people out of work, but grow the economy.”

According to Kaplan, AI can lead to a new age of affluence and leisure, but reaching this state will depend on addressing labour volatility and income inequality. “There will be plenty of jobs around, but the main effect of technology will be to change the skills that people need to accomplish their jobs,” he said.

Jin-Hyung Kim, emeritus professor at the Korea Advanced Institute of Science and Technology, said: “The best benefit of AI is automation, but full automation is not a good story for humans.”

Kim said promoting and providing high-quality public data is the single most important policy for AI at present and in the near future.

Given that AI runs on the ability to “learn” from new data, the EIU warned: “Should governments fail to develop and enact policies that assuage privacy and protection concerns while ensuring access to data, the growth potential of AI will be diminished.”