Britain and OpenAI have struck a strategic partnership to deepen collaboration on AI safety research and explore potential investment in the country’s infrastructure, Reuters reports.
“AI will be a key driver of the changes we need to make across the country—whether reforming the National Health Service, removing barriers to opportunity or boosting economic growth,” said technology minister Peter Kyle.
The government plans to invest £1bn in computing infrastructure for AI, aiming to expand public compute capacity twentyfold over the next five years.
Race for leadership
The United States, China and India are accelerating in the AI race, piling pressure on Europe to catch up.
The OpenAI tie-up envisages London exploring how to apply AI across justice, defence, security and education.
OpenAI chief Sam Altman praised the government for being among the first to recognise the technology’s potential. He was referring to “Plan for Change”—Prime Minister Keir Starmer’s initiative to make Britain an AI superpower.
The programme includes investing in AI to raise public-sector efficiency, creating geographic “AI growth zones”, and backing critical infrastructure such as data centres and research clusters.
Private firms have pledged $17bn and 13,250 jobs to deliver the plan.
Ministers reckon the initiative could add £47bn to the economy over the next decade.
Britain near the top
Britain has cemented a place among global AI leaders. In 2024 the country’s AI sector was valued at roughly £72.3bn, third after the United States and China.
The UK is Europe’s largest AI market: it has more than 2,300 venture-backed AI companies whose combined market value reached $230bn in the first quarter of 2025.
The country counts eight AI unicorns (valued above $1bn), behind only the United States (131) and China (39). Investment remains brisk: in the first quarter of 2025 British startups raised about $1.03bn in venture funding—the highest in three years.
A rich research-and-development ecosystem is a key strength. Britain hosts world-class universities and labs, including the Alan Turing Institute, that train specialists and push the frontier of AI. A powerful tech cluster has formed around London, attracting domestic and foreign firms: Anthropic, OpenAI and Palantir have chosen the city for their European headquarters.
AI is spreading across the economy: 76% of leaders of British tech firms report a positive impact on business growth, with AI deployed in finance, health care, cybersecurity, industry, education and even the creative sectors.
Notable players
Recent years have spawned a crop of notable UK AI startups, some with global reach.
DeepMind is the standout. Founded in London in 2010, it became a pioneer in deep learning and AI, famed for systems that can beat humans and other breakthrough research. Google acquired the startup in 2014 for about $500m–$600m.
In medical and pharmaceutical technology, BenevolentAI and Exscientia use AI to discover new drugs. Their machine-learning algorithms speed up discovery and have already led to partnerships with global pharma companies.
British firms are also making strides in autonomy and robotics. Wayve, a London company founded in 2017 by Cambridge alumni, uses Embodied AI to train self-driving cars.
Britain has distinct strengths in AI hardware and generative models. Graphcore, a Bristol startup founded in 2016, developed its own high-performance AI processors and raised about $700m from major venture funds and corporates.
Another headline name is Stability AI, a London firm founded in 2019 and known for Stable Diffusion, a text-to-image model. It raised $101m in 2022 at a $1bn valuation.
In cybersecurity, the UK flag-bearer is Darktrace. Founded in 2013 by Cambridge graduates and former intelligence officers, it applies AI to detect cyberthreats and anomalies on networks in real time. The firm quickly grew into a global cyber-AI player and in 2021 completed an IPO on the London Stock Exchange.
Today Darktrace serves thousands of organisations worldwide with a system that learns to spot attacks from the subtlest deviations in network behaviour.
On militarisation
Advancing AI is a top priority for the British government. Back in September 2021 the country launched a National AI Strategy aimed at making the UK a global AI nation. It set out three pillars: boosting research investment, supporting adoption across the economy, and ensuring appropriate regulation and ethics.
In 2022 the Ministry of Defence issued a separate “AI Strategy for Defence”. In the 2025 Strategic Defence Review, AI was described as “a fundamental component of modern warfare”, with integration essential to maintain operational superiority.
Once seen as merely a support tool, Britain’s Armed Forces now plan to transform into “technologically integrated forces”, deploying AI at every level—from staff analysis to the battlefield.
One priority is using language models to speed and sharpen decision-making. The aim is to deliver Decision Advantage, enabling teams to process intelligence and battlefield data in real time with AI, outpacing adversaries in situational awareness.
In the coming years the MoD intends to build a “digital targeting network”—a unified information system that fuses data from satellites, drones, radars, cyber intelligence and more, and helps automatically identify and assign priority targets across different effectors.
Powered by AI algorithms, this network would replace siloed systems with “data-centric operations”, in which decisions to strike can be made in minutes and passed instantly to the chosen effector—be it a precision munition, a drone or a cyber weapon.
The armed forces are also pushing autonomous and robotic systems, with prototypes already on trial: from various classes of uncrewed aircraft to underwater drones.
The Royal Air Force, working with defence firms, is developing the sixth‑generation Tempest fighter (the Future Combat Air System, FCAS), planned with AI elements to assist pilots and control swarms of autonomous wingmen. Likewise, the Army is testing the “Recce‑Strike” concept—integrating reconnaissance drones and robotic ground platforms with strike assets, where AI conducts initial search and targeting.
The Royal Navy is investing in autonomous vessels and submarines, from small robotic craft for port patrols to fully uncrewed underwater vehicles for mine reconnaissance and surveillance.
New major platforms (combat aircraft, ships) are expected to be designed for “hybrid” crews in which humans and language models work closely together. For example, future carrier air wings are to include a large share of uncrewed systems—reconnaissance drones, tankers and strike UAVs—managed by AI in concert with piloted aircraft.
AI is also gaining importance in cybersecurity and electronic warfare. In 2023 a unified electronic-warfare team was created within the armed forces.
Its task is to exploit AI to automatically detect and stop cyberattacks, protect military networks and manage EW assets in fast-changing conditions.
AI can analyse millions of events in military networks in real time to spot suspicious activity, or help tune jamming and electronic attacks for maximum effect against enemy comms and radar. The MoD also plans to use the technology in information operations—from monitoring social media for disinformation campaigns to building realistic cyber-threat simulators for training.
Rollout is aligned with allies and shared values. Britain is co-ordinating efforts with NATO partners; within the alliance, ethical principles for military AI are being developed. The UK helped drive their adoption and in its strategy pledges to uphold “security, stability and democratic values” as AI enters defence.
For now, mostly on paper
For all the grand plans, independent observers note that Britain’s defence‑AI sector is still in its early stages and will need significant effort to reach its potential.
In January 2025 the House of Commons Defence Committee published a report, “Developing Defence AI Capability and Expertise”, stating plainly: “The UK has the potential to be home to a first-class defence AI sector, but at present this sector is underdeveloped and needs stimulation from the Ministry of Defence.”
The committee urged the department to quicken practical steps and bridge “the gap between rhetoric and reality”. In its view, AI is still treated inside the military largely as an experiment, even though it has proved its worth in real conflicts (for instance, Ukraine’s use of AI for intelligence analysis and drone operations).
The government agreed with the recommendations and said the 2025 Strategic Defence Review is designed to embed AI systematically across defence.
In November 2024, experts shared their views on the prospects for using AI in war.