The UK government is facing a significant challenge in reviving economic growth, as it grapples with the realities of its recent Budget. While the focus on frontier innovation is commendable, experts highlight the urgent need for a comprehensive technology diffusion system that would enable businesses to adopt productivity-enhancing technologies. This approach could ultimately stimulate economic growth across the country.
A key element of Britain’s Industrial Revolution was the establishment of institutions, incentives, and skills that facilitated the transformation of invention into innovation. Historical figures like James Watt, who refined the steam engine, relied on partners like Matthew Boulton, who provided the necessary capital and entrepreneurial spirit. In this context, the government must learn from the past as it seeks to foster growth in today’s economy.
Balancing Innovation with Technology Adoption
In recent announcements, the UK government has emphasized its commitment to innovation, particularly in the realms of artificial intelligence (AI) infrastructure and research. However, despite the scale of investment in these pioneering fields, there remains a significant gap in support for the vast majority of companies that find the adoption of new technologies to be high-risk and uncertain.
The latest Global Innovation Index positions the UK sixth overall yet reveals a concerning rank of 37th for “knowledge absorption.” This discrepancy indicates that while new ideas are being generated, they are not effectively disseminated throughout the economy. Countries like Singapore and Germany have established proactive diffusion systems, such as Singapore’s SMEs Go Digital programme and Germany’s Mittelstand-Digital, which actively assist businesses in adopting new technologies.
In stark contrast, the UK has reduced its investment in critical foundations for technology diffusion—namely workforce training, management quality, and organizational development—by half since the financial crisis. The difficulty in adopting new technology stems from the challenges of identifying, acquiring, and integrating appropriate tools, which often requires time and capital investment that may not yield immediate returns.
Reforming the Technology Diffusion Ecosystem
To address these challenges, it is essential for the UK to modernize its technology diffusion ecosystem, ensuring that all businesses—regardless of size—receive comprehensive support in integrating new technologies. This can be achieved by leveraging existing resources, particularly the country’s esteemed universities, which already play a vital role in local economies.
With appropriate funding and mandates, a national network of University Technology Adoption Centres could provide hands-on guidance, training, and peer learning opportunities. This would significantly lower the barriers for smaller companies seeking to adopt new technologies. Both the Russell Group and Universities UK have expressed support for a more active role in assisting businesses with technology adoption.
Additionally, the UK could implement a digital “CTO-as-a-Service” model that serves as a single entry point for firms in need of assistance with technology adoption. This system could utilize modern technology to deliver personalized support at the firm level while remaining scalable across the entire ecosystem. Key components of this approach would include a digital CTO platform, a business digital ID for targeted outreach, and an AI assistant to enhance the ecosystem’s capacity.
The potential benefits of upgrading the UK’s technology diffusion system are substantial. According to analysis from the Tony Blair Institute, effective reform could contribute over £6 billion to the nation’s GDP within this Parliament—comparable to significant government reforms in areas like planning. This initiative could generate higher tax revenues, which would offset much of the investment required.
Beyond the economic figures, a robust technology diffusion system provides a pathway to more inclusive prosperity. By ensuring that new technologies reach firms and regions that have historically been underserved, the government can transform its mission of stimulating growth into a collaborative national effort. Ultimately, the future prosperity of the UK will depend not only on what it invents but also on how effectively it shares those innovations across the economy.
