Artificial intelligence could save London from losing our competitive edge to the US
The future is AI and if London wants to be a global leader, we need to strike the right balance of innovation and regulation here in the City, writes Chris Hayward
A cornerstone of London’s success in recent years has been the focus on digitalisation and innovation. These twin pillars have helped build the City into one of the world’s most advanced markets.
Indeed, recent competitiveness benchmarking report from Canada Corporation showed that despite geopolitical shifts, a challenging global macroeconomic environment, and difficult financial market conditions, London remains a world leading financial centre.
But that competitive advantage is under threat like never before. Recent research by SCM Direct suggested that Britain’s top 100 companies would be worth towards £500bn more if they moved their stock market listings to New York.
The UK has a dynamic venture capital sector, but we must do a better job of incentivising capital into our innovative start-ups so that they list in London, rather than elsewhere.
We mustn’t dig our heads in the sand and ignore this threat. We need to accept that we need to do better, be more attractive, more innovative, if we are to excel in the future.
The Future Growth Fund, targeting up to £50bn of private sector defined contribution pension schemes, would inject transformational capital into industries such as fintech, biotech, life sciences, and green technology.
Finding new sources of capital so that British companies can both start-up and scale-up without leaving our shores, is just one of several issues.
The future of our economy is digital. We must therefore ensure that we have the right regulatory environment, one that does not stifle innovation. Regulation can help technology grow. To paraphrase Goldilocks, regulation must be “not too hot and not too cold, but just right”.
Conversations led by the Financial Conduct Authority on reviewing corporate governance structures and replacing the current rules with a single listing category with one set of requirements are positive steps forward.
I have no doubt that by focusing on innovation we can find a path to prosperity once again.
One of the areas we need to show leadership is in artificial intelligence. At a time when everyone, everywhere, is looking to stimulate economic growth, PwC has predicted that UK GDP will be 10.3 per cent higher in 2030 because of AI. That’s the equivalent of an additional £232bn – greater than the annual cost of the NHS in England – making it one of the biggest economic opportunities in a generation.
The second is digital cross border payments. New technologies are revolutionising financial services. As we explore this new frontier – with UK pilots currently taking place – it will be vital that we follow a path that allows innovative technologies to thrive and protects consumers through agile and proportionate regulation.
The third is cyber security. Last year, UK cyber revenues hit over £10bn. This growing industry supports almost 2,000 businesses, employing nearly 60,000 people. As the world becomes more geopolitically unstable, cyber security will only grow. It is vital that we in the UK ride this developing wave of success so that our critical national infrastructure can endure any storms that come.
By striking the right balance of innovation and regulation, the City has a real opportunity to become the world’s leading tech capital.