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Prime Minister Sir Keir Starmer will pledge on Monday to make Britain the “best government partner” for artificial intelligence companies in the world, as he tries to boost the UK’s growth prospects against an ominous economic and political backdrop.
Starmer, writing for the Financial Times, will argue that Britain’s “values of democracy, open trade and the rule of law” make the UK a natural location for investment by AI companies, and promises to remove planning restrictions and create new “AI growth zones”. “.
“I am determined that the UK will become the best place to start and grow an AI business,” he writes. “I know that growth in this area cannot be led by the state. But it’s absolutely the government’s job to make sure the right conditions are in place.”
Starmer hopes to return to the helm after a week in which his economic plans were disrupted by markets, leaving chancellor Rachel Reeves potentially facing the need to cut spending or raise taxes to keep her fiscal plans on track.
Reeves, who returns from a visit to China on Monday, will this week “bring in” regulators to tell them to be more ambitious in removing obstacles to growth.
Meanwhile, Starmer faces calls from Tory leader Kemi Badenoch dismissed his city minister Tulip Siddiqwhose position remains uncertain after becoming embroiled in a real estate scandal linked to the ousted government of Bangladesh.
Last week, UK borrowing costs climbed to close to the highest level in 16 years against a backdrop of sticky inflation and fears that Reeves’ tax hike in the budget contributed to stagnant growth.
The sense of economic gloom was reinforced by a Deloitte survey of UK chief financial officers, which found business optimism fell to a two-year low in the fourth quarter.
The survey found that a net 26 percent of CFOs said they felt more pessimistic about the outlook for their business than they did three months ago, the first time sentiment has dipped into negative territory since the second quarter of 2023.
CFOs said cost-cutting would be their most likely response to Reeves’ £25bn increase in National Insurance contributions.
Deloitte said UK businesses expect a reduction in capital expenditure, discretionary spending and reported the biggest drop in employment expectations since the pandemic. Despite this, the survey found that confidence is well above the lowest levels recorded in 2020 and 2022.
Mel Stride, the shadow chancellor, told the BBC that “business confidence is plummeting because of the measures taken by the government” and insisted Reeves should have quit her visit to China to calm the market.
But one adviser to the chancellor said: “Did he seriously say she should have given up traveling to stay at home over the weekend to deal with the closed market? Markets would rightly see that as panic.”
A Starmer ally said any suggestion that Reeves’ position was under threat was “absolute nonsense”.
Starmer still believes that Reeves’s October Budget, which sought to stabilize public finances and support public services with a £40bn tax increase, will be justified in the long term, despite the market turmoil.
Reeves is planning her own speech on growth, but that has been postponed until after her trip to the World Economic Forum in Davos later this month.
On Thursday, they will convene eight regulators to explain what they are doing to boost growth. In her Speech in the palace she told watchdogs in November: “The UK has regulated for risk but not for growth.”
