Kemi Badenoch: AI firms ‘won’t come here’ if Britain overregulates
Kemi Badenoch has warned Britain risks driving away the next generation of AI giants unless it lowers industrial energy costs or fixes London’s capital markets, arguing the UK cannot regulate its way to becoming a global tech leader.
Speaking at the Politics UK Summit in Westminster on Monday evening, the Conservative leader said Britain was at risk of squandering its position as one of the world’s leading AI hubs by making it harder for companies to build and scale here.
“We need to make sure that we don’t overregulate to the point where the companies don’t even come here in the first place,” Badenoch said.
New figures published this week by HSBC Innovation Banking and Dealroom showed UK startups attracted $17bn (£12.7bn) in venture funding during the first half of 2026, with AI companies alone raising a record $12.6bn – almost three quarters of all venture capital invested in the UK.
But Badenoch argued maintaining that momentum will depend less on government industrial strategy and more on creating the right conditions for business.
“I see AI for this generation as what the internet was for the early to mid-90s,” she said. “What we want is to be ahead of the pack. We want to be specialists. We want to be great at developing AI. That means being able to keep the AI companies here. The cat’s out of the bag. We can’t control it.”
Britain currently ranks behind only the US and China in AI development, but Badenoch said structural weaknesses risk pushing firms overseas just as investment accelerates.
High energy bills and weak markets ‘holding Britain back
“We’re not going to get any data centres here if our industrial energy costs are four times what they are in the US,” Badenoch added, pointing to electricity prices as a major barrier to attracting the infrastructure needed to power the next generation of AI.
“Building up Britan’s home-grown AI capabilities is an absolute must for the next government, particularly with rising cyber crime threatening critical national infrastructure”, said Graeme Stewart, head of public sector at Check Point. “The UK cannot afford to play catch-up in the global race for AI capabilities, especially when the technology can face restrictions or outright bans.”
However, research published this week by HSBC Innovation Banking and Dealroom found UK startups raised $17bn (£12.7bn) in venture capital during the first half of 2026, with AI firms accounting for a record $12.6bn of that total.
Badenoch warned Britain is still failing to convert that early success into long-term growth. “We have lots of startups coming out of some of our great universities and the minute they start to get interesting, they leave and go to the US because the capital markets aren’t deep enough here,” she said. “We need to sort out listings. We need to sort out access to capital.”
While European IPO proceeds climbed 76 per cent to €7.2bn in the first half of 2026, and global IPO proceeds tripled, listings in London have so far failed to accelerate. So far this year, just five companies have listed on the London Stock Exchange’s two markets in 2026.
Dealmakers are hoping a string of prospective London listings could boost the market in the second half of the year, including roadside recovery giant AA and rival RAC, as well as Waterstones.