The impact of Artificial Intelligence (AI) across UK’s industrial and commercial activities could boost Northern Ireland’s GDP by up to £2.6 billion by 2030, according to new research by PwC.
That’s the equivalent of an annual £1,900 extra spending power per Northern Ireland household, with the improvements coming from gains in productivity, new business investment and product improvement, the report says.
Overall UK GDP could be 10.3% higher in 2030 as a result of AI - the equivalent of an additional £232 billion, making AI the biggest commercial opportunity in today’s fast-changing economy. Northern Ireland’s GDP could increase by around 5.4%: that’s less than the other UK regions, largely due to the region’s smaller global export activity.
AI refers to computer systems that can sense their environment, think, learn and then take action as a result. This ability to respond to the environment sets artificial intelligence apart from automation of routine tasks. Machine learning algorithms and chatbots are examples of AI that are already used by businesses today. In its assessment of the economic potential of AI, PwC looked at four different elements:
PwC’s research estimates that there will be significant gains across all UK regions with England set to see the greatest gains from AI as a percentage of GDP. GDP in 2030 will be up to 10.6% higher in England as a result of AI, Scotland and Wales are likely to experience similarly high gains of around (8-9.5%) while Northern Ireland may see a more muted gain of 5.4% of GDP.
The larger total impact on GDP in some UK regions reflects the different trade patterns in each of the countries. England, and to some extent Scotland and Wales, have stronger trade links with Europe and the rest of the world. The gains through trade related to artificial intelligence are likely to put even higher upwards pressure on GDP in these countries by 2030.
However, AI will have a similarly large impact on domestic components of GDP - consumption and investment - in each of the regions, with extra annual consumption per household could be up to £1800-£2300 higher in 2030. Although Northern Ireland may not experience the total GDP impacts on the same scale as the other regions because of fewer European and global trade links, there could be an annual spending power increase of around £1,900 annually, only marginally less than the equivalent projected for England.
Commenting on the findings Jonathan Gillham, economist at PwC, said:
The research shows that the majority of the UK’s economic gains between 2016 - 2030 will come from increasing consumer demand, resulting from A and this will drive a greater choice of products, increased personalisation of those products and make them more affordable over time.
PwC’s research predicts that the benefits from labour productivity growth will be felt first, with the increased consumption-led benefits from AI-enhanced products coming through later as more of them come onto the market. As this happens, competition within the AI goods market will increase dramatically, leading to future increases in the value of goods to consumers and therefore the amount people spend on them.
Euan Cameron, UK Artificial Intelligence leader at PwC, said:
The analysis underlines how the scale of the AI opportunity needs to be underpinned by both more robust governance and new operating models to realise its full potential. PwC’s Responsible AI report warns that effective controls need to be built into the design and implementation phase to ensure AI’s positive potential is secured, and address stakeholder concerns about it operating beyond the boundaries of reasonable control.
PwC’s global report outlines the economies that are set to gain the most from AI. Drawing on the most detailed analysis of the business impact of AI ever carried out, the report predicts that the greatest economic gains from AI will be in China (26% boost to GDP in 2030) and North America (14.5% boost), equivalent to a total of $10.7 trillion and accounting for almost 70% of the global economic impact. Included in the analysis, the PwC AI Impact Index pinpoints three business areas with the greatest AI potential in each of eight sectors, such as image-based diagnostics, on-demand production and autonomous traffic control.
Overall, the biggest sector gains globally will be in retail, financial services, and healthcare as AI increases productivity, product value and consumption. By 2030, an additional $9trn of GDP will be added from product enhancements and shifts in consumer demand, behaviour, as AI-driven consumption gains overtake those of productivity.
Jon Andrews, head of technology and investments at PwC, said:
Notes for editors.
1. Methodology: Our approach seeks to quantify the total economic impact of AI on the UK economy via both productivity gains and consumption side impacts over the period 2017-2030. A dynamic economic model of the UK economy was used to evaluate the “net” impact of each channel of impact on GDP and the economy as a whole. More information on the analysis, scope and assumptions is available in the UK report
2. PwC’s Sizing the prize global AI report is available at: http://www.pwc.com/ai
3. PwC’s Responsible AI report is available here