To Ignite British Dynamism, Embrace Early-Stage Technology
As Britain begins a new political era, we have a unique but daunting opportunity to redefine our economic and technological landscape. To catalyse growth, the incoming administration must look honestly at the nation’s challenges and implement strategic policies that both address these challenges and leverage the UK’s strengths.
To unleash Britain's potential, the government should embrace four strategic priorities: we must embrace AI, expedite the green transition, encourage risk capital, and foster the best talent. We must focus on early-stage technology. Start-ups are the engine of modern economies, driving innovation and creating jobs. NVIDIA, Facebook, Tesla, Google, and Apple were all funded by venture capitalists. Without embracing high-growth technology companies, Britain risks further losing its influence on the international stage.
AI is the most transformative technology of this century, and it presents a golden opportunity for a country grappling with stagnant productivity. The UK grew just 0.2 percent between 2007 and 2019. Yet, the UK has a storied history in technological innovation - from Alan Turing's pioneering work in computing to DeepMind's breakthroughs in artificial intelligence, and is well-placed to ride the AI wave. As we face the defining technological wave of our time, the government must champion AI and related technologies.
For AI to become a cornerstone of the UK’s economic strategy, pro-innovation regulations and collaboration between public institutions and private AI firms must be established. Leveraging national datasets, such as those of the NHS, can accelerate AI development, transforming public services from healthcare and education to defence and cybersecurity. Whether it’s easing the NHS burden through leveraging chatbots and remote care or deploying autonomous fighter jets, the UK must place AI at the heart of its technology strategy.
Next to AI, we must get the green transition right this decade. The global economy is transitioning to a new form of energy creation and distribution. Startups require government subsidies, grants, and regulatory frameworks that reduce the green premium and support scaling climate technologies. By emulating models like the USA’s landmark Inflation Reduction Act, which reduces the cost of climate technologies while emphasising domestic production, the UK can foster a robust green economy that attracts investment and drives sustainable growth. No Green Deal equivalent has yet been announced in the UK, and we risk being left behind.
Risk capital is the oxygen for innovation. Britain does not suffer from an absence of high-quality early-stage companies. There is, however, insufficient growth capital to support these companies as they scale, in part driven by low participation in technology investment by the UK’s pension funds. This has to change. Similarly, The London Stock Exchange (LSE) must reinvent itself to become a go-to listing venue for technology companies. The recent exodus of ARM, which chose to list in the US, is an economic travesty. To increase the attractiveness of the LSE, we should reduce the regulatory burden for tech IPOs, provide tax incentives for listed tech companies, and allow for secondary listings and dual-class shares. By embracing its historical strength as a financial hub, Britain can reclaim its status as a welcome home for thriving technology companies.
Finally, there is no enterprise growth without talent. A dynamic economy requires a skilled workforce. Immigrants have founded British lighthouse companies, such as Wise and Revolut, and the US’ Alphabet, Nvidia, and Tesla, all had immigrant founders. The UK must encourage high-skilled immigration to attract global talent and bolster the UK's competitive edge. Similarly, the government should enhance vocational training programs, ensuring they are aligned with industry needs. By promoting STEM education and creating pathways for continuous learning and upskilling, Britain can build a resilient workforce capable of adapting to technological advancements. While Britain boasts some of the world's leading universities, much of its science and academic potential remains locked in academia. Spinning out R&D from universities is still too hard. Simplifying bureaucratic processes and facilitating collaboration between academia and the private sector will accelerate the commercialization of cutting-edge research, driving economic growth and technological advancement.
The Labour Party has a historic opportunity to redefine Britain's economic trajectory. By embracing AI and the green transition, the UK’s role as a financial hub, and welcoming and fostering talent, the incoming government can begin a new phase of exporting technology, setting the stage for a new era of British dynamism. Without growth, there is no wealth to tax or distribute. The decisions made today will shape the prosperity and competitiveness of the UK for decades to come.