IMF predicts AI could boost UK economic growth by 16%

The International Monetary Fund (IMF) forecasts that adoption of artificial intelligence (AI) could potentially elevate the UK's economic growth by 16%. The projection is largely based on AI's effect on enhancing productivity and output.

In its World Economic Outlook, IMF predicts that AI would lead to a 0.9 to 1.5 per cent annual rise in productivity. It suggests that the UK is well-positioned to make the most of the AI revolution due to several factors including its strong digital infrastructure, a skilled workforce, innovative ecosystem, and an advantageous regulatory scheme.

The analysis is significantly positive for the UK as the global productivity boost from AI is projected to be a meagre 0.1 to 0.8 per cent by contrast. IMF analysts anticipate that AI integration in businesses could increase short-term investment, as firms would allocate more resources to implement such innovative tools which can potentially redefine their production processes.

Although the roll-out of AI could spike worker productivity and income, contributing to an overall economic expansion in the medium term, it also identifies job displacement and inequality as potential downsides. The study reveals that approximately 60% of the UK workforce is likely to be impacted by AI. Half of this percentage stands to benefit from increased productivity and hence heightened income, whereas the other half might face diminished demand for their labour resulting in lower wages. These predicted impacts of AI for workers are higher than those in emerging market economies (40%) and lower-income countries (26%).

Roman Kucera, Chief Technology Officer at Ataccama, underlined the importance of being ready for AI's rapid adoption. He explained: "The IMF's forecast for the UK indicates that significant economic potential can be generated from adopting AI sooner rather than later. The government should map the required stages to get the country AI-ready, from ensuring data quality to feed Large Language Models, data governance and regulation, to enable UK businesses to take advantage of this once-in-a-generation disruptive technology safely and confidently."

Sachin Agrawal, UK Managing Director at Zoho, believes that AI has a crucial role to play in the growth of the UK economy. He elaborated: "AI arming the business ecosystem with tools to improve productivity and efficiency gives us hope for driving growth. Recent investment from the government and international collaboration with the US have positioned the UK to soar in AI innovation."

Although AI has been crucial for several business sectors such as data analysis, forecasting and customer experience to improve daily operations, Agrawal insists that trust and safety should govern its development and use. He suggested: "Implementing safeguards to protect training data, for instance, can help mitigate the risks of AI and allow businesses to confidently adopt AI solutions, all with the aim of fostering business growth."