The UK is benefiting from an AI boom

The AI boom is beginning to appear in official data. Without it, the UK economy would be in even more of a pickle, writes Ali Lyon.

Embark on a hunt for Europe’s most vibrant AI economy, and your search will take you to a surprising destination.

The dormitory town of Slough has for decades been a caricature of a grim, philistine Britain, where life is grey and ambition is stilted. The slander began in 1937, when John Betjeman wrote of his desire for “friendly bombs” to rain down on the east Berkshire neighbourhood, to destroy its ‘hellish’ industrial park.

In the noughties, it became synonymous with post-industrial corporate banality thanks to its laughable depiction in Ricky Gervais’s ‘The Office’. And most recently, the creators of Slow Horses chose to set much of their their hit spy series in Slough House, a grim, colourless building to which agents are banished to watch their espionage careers wither.

Of late, though, Slough is becoming a place where things are happening again. The M4-corridor conurbation has forged a reputation as the unlikely poster child for the UK’s fledgling AI boom thanks, largely, to its abundant power supply and embarrassment of fibre optic cables. It boasts the largest collection of data centres in all of Europe, and, recently, became the second-largest data hub in the world behind only the hard-charging region of Northern Virginia.

Slough: Gateway to AI sovereignty?

It is a renaissance to which voters owe an increasing debt of gratitude. According to the Bank of England’s most recent temperature check of the UK economy, a fifth of Britain’s growth so far this year is down to the boost in economic activity from artificial intelligence and its adjacent industries.

“Strength in the economy has not been broad-based,” governor Andrew Bailey said at a press conference. But AI is helping dig us out of a hole largely of Donald Trump’s making.

So far, that uptick has not – despite what one might think – come from ‘real economy’ businesses leveraging the powerful technology to boost productivity. Though economists remain optimistic, there is, in fact, little to evidence of AI improving the UK’s productivity numbers at all.

Instead, the nascent AI boom is down to two other prongs. First, officials cited a large uptick in investment from professional services-like companies offering new AI-powered products to clients.

And second, was the boost from “activity in the upstream development and implementation of AI technologies”. In plain English, that means the companies and individuals building the UK’s homegrown AI industry: rapidly scaling start-ups like Wayve and Elevenlabs; the expansion of US AI giants’ UK offices; or the investment in, and provision of, data centres that power the models used by the aforementioned AI companies, many of which – yes – are in Slough.

The evidence is beginning to appear in the Office for National Statistics’ data, too. According to the authority’s August GDP figures, “information and communications” economic output grew by seven per cent year on year, while AI-exposed industries of law, accounting and research grew by nine per cent.

“It’s a little more difficult to be sure how much of a role AI has had here,” Berenberg’s Andrew Wishart wrote at the time. “Either way, it is these two sectors that explain the recent pickup in growth.”

There is a danger, however, that we are becoming overreliant on this AI halo effect for our economic fortunes. Strip out the tech-adjacent data, and the economic picture looks altogether more gloomy; so much so that Oxford Economics said a slowdown in AI momentum would presage a “substantial” risk of a recession.

“Without the AI effect […] the UK’s underlying growth would have been weak, at around one per cent a year,” lead economist Adam Slater said. “That leaves [its economy] potentially exposed.”

For now, though, the UK’s nascent AI boom remains afoot – and in Slough, the UK has an unlikely white knight to thank for it.