Adding five years onto the time it takes to roll out AI in the U.K. could reduce its economic impact in 2035 by more than £150 billion, a Microsoft report has revealed.

While the country is second in the world in its ability to take advantage of AI, only behind the U.S., the lead is only very slight over other major economies like Germany, Canada and South Korea. This suggests that time is of the essence for the U.K. to capitalise on this head start.

Microsoft commissioned independent consultancy Public First to generate the report titled Unlocking the UK’s AI Potential: Harnessing AI for Economic Growth. The results are based on a survey of more than 1,000 senior business decision makers in the U.K. and modelling the potential returns from AI, cloud, data centres and digital skills.

The research shows that taking complete advantage of AI and cloud could increase the U.K.’s GDP by more than £550 billion by 2035, the equivalent of raising annual growth rates by 2% a year.

SEE: Microsoft Bets Big on UK AI with $3.2bn Investment

Why the U.K. is not taking full advantage of AI

The Microsoft report highlighted it is crunch time for the U.K.; the next five years are crucial for putting in place enablers for businesses so they can take advantage of AI technology.

Researchers found there are a number of factors holding back U.K. businesses from digitisation in general:

• Low levels of compute capacity: As of November 2022, the U.K. had only 1.3% of global compute capacity. The Microsoft report ranked the country 11th in the world for cloud infrastructure.
• Delays in building new infrastructure: Barriers to infrastructure investment include lack of national coordination, lack of skills, concerns over energy usage and a poor planning system.
• SMBs have not adopted key technologies like cloud: Nearly a third of SMBs surveyed do not use the cloud. The most common reason for lack of technological investment is a lack of knowledge of compelling use cases.
• Lack of digital skills: 40% of businesses reported finding it difficult to recruit staff with good digital skills, leading to slower deployment of new technology.

Furthermore, almost half of U.K. SMEs surveyed in the Microsoft report do not use AI technologies in any capacity, and 73% cited concerns about the quality of outputs as a barrier to its adoption. Indeed, separate research from Stanford University found that “using AI without proper oversight can lead to diminished performance.”

Other AI deterrents cited by Microsoft report respondents include the potential unreliability of AI systems (72%) and their lack of transparency (71%). In October 2023, research from the University of Cambridge ruled that the U.K. needs AI legislation in safety and transparency so companies can confidently put resources into AI development.

How AI will benefit the U.K. economy, businesses and jobs

AI’s impact on the U.K. economy

The Microsoft report highlighted a number of ways AI will positively impact the U.K. economy:

• Saving time for individual workers: Many studies show AI can produce productivity improvements of up to 30%.
• Levelling up the skills of individual workers: Research has indicated how generative AI could act as an equaliser, as less experienced, lower skilled workers get more from it.
• Increasing resource efficiency: The Microsoft analysts wrote that AI can help businesses identify emerging problems earlier and use their economic and environmental resources more effectively.
• Enabling new products and services that would not have been possible before.
• Accelerating the development of new science and technology: AI-based simulations enable researchers to develop and understand new materials more quickly.

AI’s impact on U.K. businesses

The business decision-makers surveyed for the Microsoft report were also asked about how they might use AI in their business in the future. The top three use cases were:

• Drafting documents, slideshows and spreadsheets (66%).
• Enhancing cybersecurity (63%).
• Helping to answer customer queries (60%).

AI’s impact on jobs in the U.K.

Findings in the Microsoft report support that the proportion of roles eliminated as AI is adopted remains relatively small. Its modelling found that less than 4% of occupations saw a majority of their tasks able to be automated. In many cases, businesses are actually hiring; between 2020 and 2023, demand for AI roles grew by twice as much as average labour demand.

SEE: 10-30% of U.K. Jobs Could be Automated with AI

“In total, we estimate that investment in digital technologies and skills could have an average societal Return on Investment (ROI) over 5:1 in the next decade,” the authors wrote.

AI and the NHS

Huge progress has already been made in the U.K. NHS thanks to the use of AI technologies. The cancer imaging tool OSAIRIS allows specialists to plan for radiotherapy treatments approximately two and a half times faster, ultimately cutting patient waiting times. The Mia breast cancer screening tool trialled by NHS Grampian in Scotland detects up to 13% more breast cancers than humans alone.

The Microsoft report authors estimated the use of AI in the NHS to support the earlier detection of emerging diseases could save the U.K. an additional £500 million by 2030. Authorities are taking steps to reap these benefits, through the government investing £21 million in AI for faster diagnoses and the creation of the NHS AI Lab.

Using AI more widely throughout the U.K.’s public sector, like in the completion of routine tasks and administration, will save about £17 billion by 2035, according to the Microsoft report. “That would be enough to pay the salary for over 330,000 additional nurses,” the authors wrote.