Business leaders and politicians gathered in Davos at this year’s World Economic Forum annual meeting were told a revolution had started. Not a bloody revolution, but an economic and strategic one, with its impact felt across every industry and every country.
This unprecedented, disruptive fusion of digital, physical and biological technological developments has been dubbed the Fourth Industrial Revolution and is being catalysed by artificial intelligence (AI), mass-automation and hyper-connectivity. Britain can – and should – develop an early competitive advantage so we’re at the forefront of the new global economy, if we adopt a free-market approach.
Technological breakthroughs that have yielded new products, from high frequency trading platforms, drones and robots to driverless cars and 3D printers, have already captured the public’s imagination. By funding and championing the Fourth Industrial Revolution’s technologies and businesses – and pressing the government to adopt a free-market approach to innovation – the City can play a key role in ensuring that Britain masters this revolution, rather than just reacting to it.
As the thirtieth anniversary of Big Bang approaches this year, the evolution of technology in the City itself is an instructive example of how a pro-innovation environment drives economic development. Before the advent of computing power, trades and deals were completed through open outcry on trading floors. Now trillions of pounds, dollars and euros are transmitted, much of it through London, at the click of a button, or as is increasingly becoming the case, using AI. This January, for instance, traders at Hong Kong-based Aidyia launched a hedge fund that requires no human intervention. “If we all die, it would keep trading,” Dr Ben Goertzel, the fund’s co-founder, proclaimed.
The huge upsides from the Fourth Industrial Revolution are not just eye-catching gadgets, but substantial strategic, supply-side benefits for our economy too, including increased productivity, lower prices, greater consumer choice, and new jobs in new industries. That’s why mastering the Fourth Industrial Revolution must be at the heart of the government’s new Industrial Strategy: we must create the right environment for it to flourish in Britain.
These are points I’ll be making in my speech today, when I lead the first ever House of Commons debate on the Fourth Industrial Revolution. I called this debate, with support from across the political divide, because we must act now to ensure that our political, business, and economic structures adapt to the coming changes, before our competitors steal a march on us.
We would be building on already-strong foundations: the government has done much to promote enterprise, including delivering the G20’s lowest corporation tax rate, attracting the world’s talent through the Entrepreneur and Exceptional Talent Visa schemes, and backing innovation hubs such as TechCity and Canary Wharf’s fintech-focused Level 39. Continuing to protect intellectual property rights must remain a priority so that we provide a strong legal framework for innovation. With the rise of new technologies like 3D printing, investors need reassurance that their digital assets will be protected.
Growing automation may threaten some low-skilled jobs – factories in the future might only need a constant supply of raw materials and energy to produce goods – as well as some white collar ones, so continued investment in education and training is needed to nurture a flexible and skilled workforce. And where roads, bridges and viaducts facilitated the Victorians’ industrial growth spurt, digital infrastructure such as universal broadband and 5G internet are tomorrow’s equivalents.
The countries best able to adapt to the Fourth Industrial Revolution will be those with nimble free-market economies, low taxes, and a competitive regulatory environment that encourages entrepreneurialism and protects innovation. As a new Industrial Strategy is developed, the government must continue to focus on pro-enterprise policies that encourage investment in emerging technologies, and the companies and founders behind them.
Throughout history, Britain has adopted a pro-innovation approach to technological development. From farming mechanisation and domestic labour saving devices to the City’s Big Bang, we did not allow fears about the future to stunt our economic and social progress. We soon realised the folly of requiring drivers of early cars to be preceded by a man carrying a red flag. We must adopt the same, forward-thinking approach when it comes to the Fourth Industrial Revolution.
The City’s openness to innovation, access to finance and entrepreneurial spirit has already made it a world leader. As a new revolution accelerates, changing Britain’s economy and society forever, policy-makers should be drawn to the City’s free-market approach if the UK is to lead the world again and win the global race for success.