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2025 predictions: What does the year have in store for tech? – UKTN

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With several major elections around the world and persistent economic instability, 2024 can perhaps best be summarised as a year of profound change.

This is certainly true in the UK, with Labour’s victory in July putting an end to 14 years of Conservative rule. In the election campaign, Labour repeated their top priority again and again: growth.

And yet, the Chancellor’s first Budget in October left many small businesses and startups feeling that the government was making things harder, rather than helping them to drive economic recovery.

After such a tumultuous year, December is an opportune moment to look ahead to what 2025 has in store for entrepreneurs in the UK.

AI and Regulation

In 2024, business use of AI really took off. Globally, 40% of firms now use AI – and 2025 promises to be a year where more will get to grips with how to implement the technology in their day-to-day operations.

While use cases are expanding, many firms’ integration of AI support is yet to extend much beyond the simple question and answer format of ChatGPT – next year, however, it seems inevitable that the technology will increasingly be used to support and inform key business and leadership decisions.

One example is Agentic AI, which can take in large quantities of data and output actionable suggestions, providing valuable insight and time savings for managers and leaders planning their years. This ability to streamline planning and leadership will allow startups to be incredibly agile, pivoting to the needs of the market and adapting to stay competitive.

At the same time, firms will also need to grapple with individual employee use of AI – particularly in terms of compliance and regulation when it comes to sharing data. ‘Clean data’ was a hot topic of conversation this year, as was transparency around data sources. Businesses will need to manage their employees’ uses of AI, in order to be sure as to whether they are infringing on copyright or acting on incorrect data that has been fed into an AI model.

And with widespread mainstream adoption will follow regulation. In February, France will host the AI Action Summit, aiming to bring together global regulation and agree on an international framework to utilise this groundbreaking technology while protecting consumers.

The UK is also strengthening its AI Safety Institute (AISI), with a £50m investment. For fast moving startups breaking into cutting edge fields such as AI, international regulation will bring compliance challenges in need of navigating.

 

HealthTech

One sector at the forefront of next year’s eagerly anticipated growth is HealthTech. Last year, the NHS spent £239 billion – equivalent to 11% of gross national product. This presents a real opportunity for HealthTech startups – and they seem set to benefit further from the new government’s calls for a more digitally connected NHS, and the introduction of regulations next year which facilitate greater competition and interoperability.

Indeed, if Fintech is the “jewel” in the crown of the UK technology sector, then HealthTech certainly seems like its hidden gem. A new report from the Association of British HealthTech Industries and Imperial College London found that R&D health technology spending is set to increase 50% in the next five years, creating more than 50,000 skilled jobs.

Of particular interest next year is the potential for AI Personalisation, where healthcare is tailored to the individual and quicker than the typical system. With greater use of personalisation, the hope is that healthcare will eventually transition care from diagnostic to preventative, tackling illness before it affects a patient.

As well as the challenge of ensuring that these increased use cases for AI are compliant with regulation, the biggest challenge for the sector will be keeping the brightest and best companies here. Nearly one quarter (24%) of UK HealthTech SMEs say they would prefer to launch in the US rather than the UK – and so next year’s task for the government and the private sector will be to ensure the investment landscape is sufficiently dynamic and capable of retaining the most innovative firms in this sector.

 

GreenTech and ClimateTech

Widespread usage of AI will also require greater capacity of data. During the Autumn Budget this year, Labour designated Data Centres as critical infrastructure, laying out a plan to increase the UK’s AI and Quantum capacity, creating a competitive environment for growth.

Startups and firms already invested in data centres will be able to capitalise on this initiative, taking on construction contracts across the UK, while firms that are invested in technology reliant on data centres, such as AI and Quantum, will find themselves with more capacity to grow.

However, AI and quantum have been under the spotlight for their intense energy requirements, and the level of carbon both industries emit. During the Autumn Budget, Labour promised a £24bn investment into energy infrastructure, and with the rush to meet the energy requirements of AI, attention has turned to nuclear power.

Both Sam Altman of OpenAI and Google have started to invest in nuclear reactors for data centres, and more are likely to follow in 2025. Clean tech firms working in the energy sector will have the opportunity to assist our transition away from carbon and facilitate our growth. The UK Atomic Energy Authority and University of Bristol have successfully created the world’s first carbon-14 diamond battery with the potential to provide an incredibly long-lasting energy source.

 

A diverging world

If 2024 was the year AI came into the mainstream, then it is set for mass deployment and accelerated use in 2025 – impacting health and climate, as well as creating opportunities far beyond the tech sector.

With more regulation on the horizon from the UK and France, in contrasting to Trump’s more “freewheeling” approach, it seems as though the global regulatory landscape is set to become more disconnected than ever. It is, therefore, critical for the UK regulatory agencies to be aligned on roles and responsibilities and work on balancing regulation with the drive for innovation.

With India having set a goal of making all the world’s chips by 2025, the US set to fully deregulate the crypto markets, and the UK potentially disrupting innovation in batteries, the best prediction for 2025 is that anything is possible.

 

Russ Shaw is Founder of Tech London Advocates & Global Tech Advocates

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