£232 billion AI market is UK's largest economic opportunity
UK GDP could be around 10% higher in 2030 as a result of Artificial Intelligence (AI), making AI the largest commercial opportunity for the British economy. According to a new report, AI could generate the equivalent of an additional £232 billion.
Artificial Intelligence presents the biggest commercial opportunity in the world’s rapidly changing economy, with Britain in line to be big beneficiaries of the new technology, to the tune of an additional £232 billion, that would grow national GDP by 10%, according to a new investigation. Meanwhile, contrary to recent projections that automation could lead to falling employment rates, particularly among skilled Millennials, AI may actually boost jobs and pay.
In a statement following the release of Sizing the Price, PwC, the company behind the recent global study, said the research represented the most detailed analysis of the business impact of AI ever carried out. The paper shows that the majority of the UK’s projected economic gains over the period to 2030 will likely stem from increasing consumer demand, resulting from AI driving a greater choice of products, alongside enabling increased personalisation of those products, and making them more affordable over a shorter span of time, due to the high level of production. Labour productivity improvements will also drive GDP gains, but to a lesser extent.
Quantifying the total economic impact of AI on the UK economy via productivity gains and consumption side impacts over the period 2017-2030, PwC analysts constructed a dynamic economic model of the UK economy, which they then used to evaluate the “net” impact of each channel of impact on GDP and the larger economy as a whole. The research shows that the majority of the UK’s economic gains over the period to 2030 will come from increasing consumer demand resulting from AI driving a greater choice of products, increased personalisation of those products and making them more affordable over time.
Labour productivity improvements will also drive GDP gains, albeit to a lesser extent. Recently the Office for National Statistics published figures showing the UK had lost around 620,000 jobs in manufacturing since 2006, with increasing automation cited as one of the factors contributing to this downward spiral. However, PwC researchers stated that contrary to the focus of previous studies on AI, which largely focused on the rate that increased automation would raise unemployment, their analysts had found evidence to suggest that AI-driven products and services could generate significant offsetting job gains, as well as boosting average real wage levels, replacing mundane and repetitive jobs with opportunities in skilled work.
The researchers anticipate that while the nature of a large number of jobs while others will be susceptible to total automation, the boost to UK GDP could in fact see a boost to employment and pay then, in-keeping with a recent Deloitte report, which suggested that automation had already created more jobs than it had ended over the past 15 years.
PwC’s study also notes that during this continuing period of workforce realignment, the benefits from labour productivity growth will be felt first, with the increased consumption-led benefits from AI-enhanced products coming through later as the number such items arriving on the market continues to grow. As this happens, competition within the AI goods market will increase dramatically, leading to future increases in the value of goods to consumers and therefore the amount people spend on them.
The report extensively highlights the potential size of rewards to be reaped by the effective implementation of AI however, along with anticipating technology’s potential to transform the employment relations and productivity of the UK economy, as well as growing GDP substantially. However, researchers were also keen to point out such heady ideals may only be realised if businesses and governments work to ensure that AI systems are adopted in a planned and responsible manner, in which every part of society could benefit from innovation, rather than fear the consequences of it.
Referencing PwC’s other recent Responsible AI Report, analysts warned that effective controls need to be built into the design and implementation phase, limiting disruption through more robust governance and new operating models, to ensure AI’s positive potential is reached, while addressing consumer, employee and stakeholder concerns about its excessive implementation beyond the boundaries of reasonable control.
Euan Cameron, UK Artificial Intelligence leader at PwC, said, “No sector or business is immune from the impact of AI. That’s why it’s so important for the UK to place itself at the forefront of the AI revolution and create the right environment for existing and new businesses to innovate and make the most of the product, productivity and wage benefits that this technology can bring.”
Global findings
Sizing the Price meanwhile also outlines the economies that are set to gain the most from AI. Drawing on the detailed analysis, the report shows that the greatest economic gains worldwide from AI are likely to be seen in China with a potential $7 trillion shot in the arm boosting the Asian powerhouse’s GDP by 26% in 2030. The collective economies of North America meanwhile were predicted to see a 14.5% boost worth $1.8 trillion. The total GDP rise in these two regions could see a total increase of as much as $10 trillion, accounting for around two-thirds of the estimated total global economic impact of around $15 trillion.
Overall, the biggest sector gains globally will be in retail, financial services, and healthcare as AI increases productivity, product value and consumption. By 2030, an additional $9 trillion of GDP could be added from product enhancements and shifts in consumer demand, behaviour, as AI-driven consumption gains overtake those related to higher productivity (estimated at around $6 trillion by 2030). Of the sectors analysed, healthcare had the highest potential AI consumption impact of 3.7 out of 5.
The health sector also looked to be the largest beneficiary in terms of utility, scoring 3.9, while it ran a narrow second to the automotive industry in terms of personalisation, with automation allowing an industries scores of 3.8 and 3.8 respectively. Analysts predicted a rise in individualised care enabled by AI as well as a general improvement in the quality and benefit of healthcare to society. A recent survey found the British public to remain distrustful of AI health solutions, however globally, particularly in developing nations, citizens expressed great excitement at the potential of affordable care this could provide.
Jon Andrews, head of technology and investments at PwC, said of the findings, “Our analysis highlights that the value of AI enhancing and adding to what businesses can do now is large, if not larger than the impact of automation. It demonstrates how big a game changer AI is likely to be – transforming businesses, people’s lives and society as a whole. The big question is how to secure the right talent, technology and access to data to make the most of this opportunity. To meet this challenge we need to be even more innovative in the way we develop technology skills in the UK.”
