AI could grow UK economy by a fifth: McKinsey
Written by Hannah McGrath
UK firms adopting artificial intelligence (AI) tools could deliver a 22 per cent boost to the UK economy by 2030, according to a new report from McKinsey and data analysis from Quantumblack.
The analysis, based on simulations from McKinsey Global Institute (MGI), also suggested that firms could benefit from a 120 per cent increase in total economic value, implying additional growth in cash generation of about six per cent a year for the next 12 years.
The research found that despite transitional challenges for AI adoption across a number of UK industries, AI could have a significant impact on productivity and economic growth, including broader benefits for society such as improved longevity and health.
The report particularly highlighted progress in the UK’s HealthTech sector, with the UK named the leading country in Europe for the density of HealthTech and MedTech startups.
However, the report warned that for the majority of firms it is still “early days” for AI adoption, with the picture unclear for how much of the UK economy stands to benefit from the gains available.
On a global scale, the MGI simulation also suggested that the potential impact of AI technologies could add an incremental 16 per cent to global output by 2030.
On average, the UK was found to be set to reap additional benefits compared to the global average owing to its ‘AI readiness’, however the report stated that “the country still has to scale up its AI effort based on its relative digital assets and competencies”.
The UK’s opportunity for a productivity and growth boost from AI could quickly shrink if it does not nurture the potential of the technologies, the report found, as the so-called AI gap between Europe and the frontier of technological process (represented by the United States) has already increased by 20 per cent in the past three years.
In addition, ‘laggard’ businesses, which are slow to adopt AI or not at all, could lose about 20 percent of cash flow compared with today, based on the simulation.
Helen Mayhew, chief operating officer at QuantumBlack, said: “Multiple recent studies have found that business’ economic performance are increasingly determined by making the best use of technology, and ‘winner-takes-most’ dynamics are becoming evident across sectors – some firms may use AI to gain competitive advantage, whereas others could fall victim to disruption.
“The gap is not likely to widen automatically, so we need to be proactive in both the development and diffusion of AI technologies,” she continued. “The UK is well-positioned to take advantage of these opportunities, and so the potential rewards for businesses, and society more broadly, are significant.”