May 26, 2024


The UK, Switzerland, and Sweden are poised to cash in from the AI gold rush, but most of Europe will be a poor nephew to Uncle Sam.

So say the expert analysts at Capital Economics, a financial research firm based in London. In a new study, the company assessed which countries are best placed to benefit from the AI boom — and which ones will be left behind.

Using 40-sub-indicators, the researchers analysed their capacities for AI innovation, diffusion of the AI effectively, and adaptability to the impacts. The three categories were then combined to calculate a global ranking.

Unsurprisingly, the US topped the charts, but there were some shockers in the chasing pack.

Among them was the relatively low position of China. Despite the phenomenal AI developed at companies like TikTok and within research institutions, immense regulatory barriers and government intervention in the private sector sunk China to a middling performance.

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In Europe, meanwhile, the outlook is mixed. Leading the continent is the UK, which ranked third globally, behind only the US and Singapore.

“The UK could benefit from lighter-touch regulation.

The study team gave several reasons for Britain’s loft position. Despite perennially low investment rates, the country has become a magnet for AI talent and boasts a propitious business foundation.

One of the country’s greatest strengths is its higher education system, particularly in the golden triangle formed by the university cities of Cambridge, London, and Oxford, which attract top talent from around the world.

Another innovation engine is Google DeepMind’s pioneering AI lab, which is based in London. The analysts also expect the UK’s flexible labour market to support the wider economic adaption to AI, while its service-oriented economy can accelerate the diffusion.

Britain may be further impacted by its position outside of the EU — both positively and negatively. While Capital Economics doesn’t expect Brexit to be a major factor in the AI economy, the research team can envision some effects.

“On the plus side, the UK could benefit from lighter-touch regulation if the EU regulates AI more strictly in future,” Andrew Kenningham, the firm’s Chief Europe Economist, told TNW. “But set against that, there could be reduced collaboration on AI projects or the UK could be hindered from participation in large-scale European AI initiatives.”

Next in line for the throne

The UK is one of three European countries rounding out the global top five. Taking fourth spot is Switzerland, while Sweden bagged fifth. Both countries were particularly strong in adaption, ranking first and second in the world, respectively.

“This essentially means that they have a good track record on redeploying resources,” Kenningham said.

In terms of innovation, Switzerland and Sweden ranked slightly higher than Germany and a bit lower than the UK. But they both lagged far behind China and the US — a common issue in Europe.

“Europe is a long way behind the US and China on our sub-index of ‘innovation’ essentially because it invests less in AI research and has less academic research in that area,” Kenningham explained.

Graph showing the Euro-zone and emerging economies in the EU are falling behind the US and Asia in their AI economic prospects