Caroline Norbury: Is the UK at risk of becoming an incubator economy?

It is being widely reported that the UK is at risk of becoming an ‘incubator economy’ following the publication of the House of Lords Communications and Digital Committee’s report, AI and creative technology scaleups: less talk, more action.   

I was privileged to give evidence to the Committee’s inquiry into Scaling up – AI and creative tech and can sadly confirm that in the UK we are teetering on a path that leads away from international collaboration and towards cultural brain drain.   

As rightful leaders in the field of creative technology, the UK should be perfectly placed to collaborate with its global neighbours and lead the way in the development of innovative solutions that will both bolster the UK economy and lead to greater international cohesion. Unfortunately, the current financial environment is such that the barriers to scaling up within the UK market are too high for many of the brightest leaders in the tech field. The likes of Revolut and Monzo – both fintech unicorns – have announced possible moves to the US, and it is feasible that more will follow.  

As with so many opportunities, this all hinges on access to finance for creative sector organisations and the challenges therein. Annually, the creative sector contributes £125 billion to the UK economy and exports around £46 billion, accounting for 14% of all UK service exports – and yet, perceptions of this sector continue to be inaccurate, founded on the idea that creativity and investability do not go hand-in-hand. Our creative sector is a petri dish for innovation at a time when the UK badly needs global players, but even the investment of public sector institutions who exist to back risk in UK businesses, is way below par.  UK Research & Innovation (UKRI), for example, who sit at the heart of publicly-led investment into new research and innovation, only invested circa 1% into creative industries between 2016 and 2021 which is significantly below the sector’s share of GVA, which stood at 5.27% in 2022. 

However, there are possible signs of light. – just two weeks ago the UK Government announced a new commitment from UKRI to develop a long-term plan for the creative sector, including strengthening investment. It’s an important step, but much more needs to be done.   I hope the publication of this report  will helps forge a more productive path for the UK’s createch companies. It is vital that the forthcoming Industrial Strategy sets a course for innovative creative companies to scale up here in the UK. We must not confuse international movement for international success; if we act now, we can incentivise our brightest minds to scale up in the UK, fostering greater innovation, healthy global competitiveness and a bolstered UK stock market.