The new government’s focus on growth is positive, but it must begin to look beyond its campaign promises to seek opportunities to improve productivity across the breadth of the economy.
The rapid digitalisation of businesses is one such source of economic growth and has the potential to add £2bn to the UK economy every year, according to our latest research.
The UK is lagging behind other OECD countries in terms of digital adoption rates.
This means the UK risks missing out on the wave of economy-wide AI implementation, which would hamper growth, competitiveness and ultimately its ability to become a science and technology superpower.
Boost: Helping smaller businesses go digital would improve productivity, says Sage Group CTO Aaron Harris
In my conversations with clients across the UK, small and medium-sized entrepreneurial businesses, many have told me they have postponed important investment decisions amid a prolonged period of economic and political uncertainty.
The new government, with a clear mandate for change over the next five years, should give businesses greater confidence to invest in future growth.
Investments, including those to future-proof their businesses by adopting AI, will be essential to achieving greater productivity and growth.
I strongly believe that the new Government must take a bolder and more proactive approach to championing digitalisation and creating a robust digital adoption strategy, starting with SMEs, which form the backbone of our economy.
The digitalisation of our professional services, starting with accounting, which has been one of the first to adopt AI, could be the catalyst for growth that this Government is looking for.
Currently, business investment incentives are geared towards capital investment, providing little motivation for companies to invest in digital technologies.
The new Government must extend full tax relief on capital investment in digital technology, alongside the implementation of a comprehensive Digital Adoption Plan to help businesses across all sectors adopt digital tools and take advantage of AI.
Future growth is at stake. Our research found that over the next three years, the accountancy sector alone could contribute an additional £2.1bn to GDP and create 19,000 new jobs by embracing AI.
Companies that are already adopting AI are more confident about their revenue growth, expecting to grow three times faster than their less technologically advanced peers and hiring ten times more people.
This is encouraging. The digitalisation of our established professional services sector, starting with the accounting industry, which has been one of the first to adopt AI, could be the catalyst for the growth that this Government is seeking.
As they move from campaigning to governing, championing the digital economy and supporting digitization will be essential to growing and preparing our economy for the future.
Aaron Harris is the Chief Technology Officer of Sage Group
