What Happens When Countries Cut Their Tech & AI Funding

The start of August 2024 saw the United Kingdom announce plans to cut its £1.3bn (US$1.66bn) investment into technology and AI ventures.

With the plans unveiled less than a year ago, it comes as a significant blow to UK-based businesses seeking to upscale their digital transformations. According to the BBC, £800m (US$1.02bn) was allocated to create an exascale supercomputer at Edinburgh University, whilst £500m (US$640m) would be used for AI Research Resource which funds computing power for AI.

The decision made by the UK government has been criticised by those within the technology industry, with executives citing that leading in AI development would contribute to the country’s growth.

It also speaks to the wider consequences of cutting technology funding in an age where digital transformation is not only desirable, but safe.

The consequences of funding cuts

Currently leading in the adoption of generative AI (Gen AI), businesses across the UK are eager to continue the momentum so that the country can maintain this edge. The growth of the UK relies in part upon the success of the technology sector, with some arguing that withdrawing from these funding commitments is a step backwards for the country’s digital growth.

“Investment in large scale computers is vital for the scientific breakthroughs that will grow our economy and improve our lives,” Director of Technology and Innovation at techUK, Sue Daley, tells the BBC.

“In an extremely competitive global environment, the government needs to come forward with new proposals quickly. Otherwise, we will lose out against our peers.”

As AI continues to develop rapidly, governments are being urged to recognise the need to act to ensure they hold a clear approach to technology safety. This is designed to help a nation strengthen its security posture, which is particularly important in an evolving cyber threat landscape.

Reducing technology investments could also lead to wider operational risks for businesses, including increased susceptibility to data breaches, financial losses and IT system failures. Projects that rely on government funding may be delayed or cancelled, which therefore put a pause on innovation.

In the current climate, as AI interest continues to surge, businesses will be looking to bolster their digital strategies. In response, governments would benefit from a long-term AI plan to boost overall digital transformation efforts.

The UKs relationship with AI

The UK has always held a strong position as a leading global technology hub, with a highly-skilled talent pool from its startups and world-leading universities. Often hailed as the birthplace of modern computing, after celebrated scientist Alan Turing cracked the enigma code, the UK continues to contribute to cutting-edge business sectors like AI, fintech and cybersecurity.

In 2023, the country led the world at its AI Summit at Bletchley Park, where it helped create an international declaration to tackle technology-related risks and a pact to assess advanced AI models. Speaking at the time, King Charles III remarked that the advent of AI is “one of the greatest leaps in human history”.

More recently in April 2024, the country signed a Memorandum of Understanding (MoU) with the United States to partner in AI safety measures and develop methods for evaluating the safety of AI systems. As part of the agreement, both countries agreed to allow their AI institutes to work together to align their scientific approaches and safely advance technology.

The UK government states it is reallocating resources to areas it states are more critical, with the new Labour government considering new regulations for the AI industry. 

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