How the UK became Europe’s dominant player in AI – and what it must do to retain its position
Artificial Intelligence (AI) is one of the fastest growing parts of the global economy. Estimates vary, but one report from Markets and Markets estimates that the AI sector will be worth $16.1bn by 2022, growing at 62.9% from 2016 to 2022. The size of the opportunity is clear.
Sitting at the heart of this growth is London. Today, London’s cluster of AI companies and research institutes – public, private and state financed – place it amongst a small group of leading global AI hubs which includes Silicon Valley, Singapore and Shanghai.
The UK has been at the forefront of AI research from its earliest days, and the extent of its financial support for AI research has had a significant impact on the rate of progress in the field. Charles Babbage began work on his difference engine in 1822, while in 1842 Ada Lovelace, daughter of George Byron, wrote the first algorithm intended to be carried out on a machine.
In the 20th Century, the UK took further strides forward. Alan Turing formalised the concepts of algorithm and computation with the Turing Machine, culminating in 1950 with the Turing Test to evaluate the extent of a machine’s capability to demonstrate intelligent behaviour indistinguishable from that of a human.
This was followed in the 1960s by Donald Michie, a colleague of Turing’s at Bletchley Park during World War II, who established Edinburgh University as one of three global centres of excellence for AI research, and went on to found the Turing Institute in Glasgow.
While attention shifted to the US in the late 20th and early 21st century, thanks to the dominance of tech giants such as Apple and Google, today, the UK is again at the vanguard of AI research.
In 2016, AlphaGo became the first program to beat a human professional Go player: its parent company, DeepMind, based in London, was acquired by Google and is now Google’s deep learning subsidiary based in Kings Cross.
The Alan Turing Institute was founded in 2015 with funding from the UK government, bringing together Oxford, Cambridge, Edinburgh, UCL and Warwick universities in one research hub to be housed in the British Library, adjacent to Google’s London Campus and the new Francis Crick Institute, Europe’s largest biomedical laboratory.
The world’s largest AI summit now happens each year in London and the city has by far the largest professional developer population in Europe; globally, it is second only to Silicon Valley. London is teeming with entrepreneurs and investors in early-stage companies diversely involved with AI, many of them focusing on areas such as financial technology in which its application is most advanced. In AI, London once again leads the world.
With such a rich history of AI involvement, it is perhaps no surprise that the UK has become the dominant player in AI across Europe. There are more AI start-ups in London than there are in the next six largest European cities combined, and 30% of Europe’s AI companies are here in the UK, more than double the amount in Germany which sits in second place.
But it would be remiss to think the UK can sit back and reap the benefits of the AI revolution. While it seems almost certain the UK will have a central role to play, the development of AI elsewhere means everything must be done to support the sector.
Starting with politicians, there have been some positive steps taken recently, including the creation of the innovative finance ISA, not to mention the overall framework of the UK tax and investment landscape.
The decision by the current Chancellor Philip Hammond to announce a series of AI-friendly measures does at least provide some indication that the government is sitting up and taking notice when it comes to the sector. But as with all politics, the decision to highlight AI in his speech likely had more to do with wanting to be seen to get behind AI, rather than a desire to truly drive it forward.
Ultimately though, support from the government for initiatives like the innovative finance ISA are a pittance compared to investment in the UK from companies like Google.
The world’s second-largest listed company is expected to spend more than £1bn in the UK on its new Kings Cross development, dwarfing the £75m pledged in the budget to invest in AI.
The true power to drive forward AI – and create opportunities – actually lies with the city. There is a reason that, despite our historic involvement in artificial intelligence, and more broadly in technology, the UK has never created its own Google or Apple.
Conversely, we have let some of our best companies (such as ARM Holdings) fall prey to those who truly understood their value.
The journey to become a megalith on the scale of Google, Amazon or one of the other FAANGs starts in the incubation phase, with a well-informed community of venture capitalists – in conjunction with the city – providing the capital these businesses need to expand and grow.
If the City and the wider investment community can tackle this challenge head on, with help from a supportive government, then maybe one day the UK will take its rightful place alongside the titans of today.
 According to data from Markets and Markets, https://www.marketsandmarkets.com/Market-Reports/artificial-intelligence-market-74851580.html
 According to data from Asgard, slide 1, https://medium.com/cityai/the-european-artificial-intelligence-landscape-more-than-400-ai-companies-build-in-europe-bd17a3d499b
 Ibid, slide 2