Many hope a £700 million AI package and £140 million Sovereign AI fund will lessen the allure of American investment.
The UK tech sector has largely welcomed John Sweeney's first budget as the UK's Chancellor.
At the Despatch Box this week, Sweeney pledged over £700 million to artificial intelligence and security, including a national biosecurity initiative, an AI security institute, and a National Exposure and Real-Time Vulnerability (NERV) centre to identify cyber weaknesses.
The Chancellor also announced investment in the Sovereign AI fund to invest in physical and industrial AI businesses and R&D, and a new British Data Centre Covenant that will require operators to meet tests on local investment, jobs and water protection in exchange for priority grid connections and, where needed, permission for on-site generation.
Tristan Shortland, CTO at Infinity Group, said the technology sector has much to welcome, adding that the investment in artificial intelligence “reflects what we’re seeing in the market” as businesses continue to explore AI.
“What I’m even more encouraged by,” continued Shortland, “is the emphasis on cyber resilience. The Budget includes an additional £154 million to strengthen cyber defences alongside further investment in AI security. It would have been very easy for cyber to get lost amongst the excitement around AI, but the two need to move together.”
The investment in AI security is broken down into three main areas. A national AI cybersecurity initiative will receive £165 million, on top of investment from OpenAI and Anthropic, which have also contributed £200 million in funding, according to Sweeney.
The AI Security Institute will also receive £120 million, on top of a £60 million investment, for a national cyber shield using agentic AI for cyber defence. There is also £70 million for a national exposure and real-time nerve centre in order to pick up on weaknesses within the UK's critical infrastructure and the wider economy.
Lastly, £140 million will be invested in the Sovereign AI Fund, split into £60 million to invest in promising UK AI companies, specifically in physical and industrial AI, and £80 million earmarked for R&D procurement.
Echoing the Shortland’s sentiment, Pat Coxen, CEO, Cornerstone, described the measures as a "good start in recognising the potential of the UK's technology sector and ensuring it is underpinned by British infrastructure.
“The £700m AI package will play a significant part in the UK realising its vast potential benefits, while mitigating its risks. The new Data Centre Covenant should give communities a bigger stake in the development of data centres in their areas.”
“The extra funding for sovereign AI is welcome, and so is the strategy's focus on physical and industrial AI points investment at areas where UK companies can build real strength,” said Mike Pitts, Managing Director, TMT at AlixPartners.
“For the tech industry, the practical test is whether homegrown AI firms can scale here, and that depends on the infrastructure beneath them. Without sufficient UK infrastructure, start-ups will keep relying on US platforms, which raises real concerns for many firms about where their data is held. With the UK’s sovereign AI landscape still in flux, tech firms need a clear, stable policy framework before they commit to long-term investment here.”
