Unlocking AI-Led Productivity Growth in the United Kingdom

AI offers a significant opportunity to lift the UK's lackluster productivity growth. The UK is well positioned, given its concentration in high-skill, knowledge-intensive services where AI shows the greatest potential. Realizing these gains hinges on five enabling conditions—infrastructure, financing, regulation, skills, and trade openness—with bottlenecks identified in each. Economy-wide reforms are a prerequisite but should be complemented by targeted interventions in regulation and skills. A model of endogenous technology adoption calibrated to the UK finds that halving regulatory constraints and expanding AI-related skills supply could jointly increase output gains by two thirds. Investment in sovereign AI capabilities carries substantial insurance value against supply-chain disruptions.