Earlier this year, the UK government released an AI white paper outlining its light-touch, pro-business proposal to AI regulation. Eight months on, and the UK appears to be sticking firm with this approach, with Jonathan Camrose (UK First Minister for AI and Intellectual Property) stating in a speech on 16 November 2023 that there will be no UK law on AI ‘in the short term’.

This stance has been taken in spite of the developments being made around the world in this area. The EU for example, by contrast, continues to make significant steps towards finalization and implementation of its landmark AI Act, with policy-makers announcing that they had come to a final agreement on the Act on 8 December 2023. Progress has also been made across the pond with President Biden issuing the executive order on Safe, Secure and Trustworthy Artificial Intelligence on 30 October 2023, with the intention of cementing the US as a world leader in the field. The UK’s reluctance to regulate in this area has been criticised by some as not addressing consumer concerns – but will this approach continue into 2024?

Will the UK legislate on AI?

The UK has reiterated the rationale behind its hands-off approach as being a pro-business strategy – allowing businesses to innovate in this area whilst deciding on the legal parameters that might be imposed on them. However, investors could be cautious of the effects of light-touch regulation in the UK and choose instead to invest in AI in more regulated markets with more perceived certainty for consumers in terms of transparency, fairness and accountability.

On the other hand, the UK continuing with its current approach could prove favourable to many businesses, allowing more unrestrained and rapid innovation, with the approach of the EU being seen as overly restrictive. President Macron has expressed concerns that the AI Act will hamper innovation, with the regulation of foundation models in particular causing the EU to fall behind the UK, US & China, and potentially cause major players to start growing their businesses outside of the EU. The Italian and German governments have also pushed back on the more stringent elements of the AI Act during the negotiations, expressing similar concerns on the affect of over-regulation.

As we move into 2024, it will be interesting to see whether the UK sticks firm with this light-touch approach, or whether it is more reflective of a ‘watch and wait’ attitude. In his speech, Camrose referenced the ‘risk of premature regulation’ in the area, alongside the rationale of ‘stifling innovation’. With so much uncertainty remaining around AI and the appropriate intervention of governments and regulators at this early stage, the UK may feel better placed to legislate further once it has the opportunity to learn from others. Once the final text of the AI Act is published and there is more clarity around the EU rules that will be in force and extraterritorially effective against those offering AI-based products in the EU, the UK can watch how this unfolds politically and economically in order to inform its decisions.

How will this affect businesses?

Corporate AI governance has been a major topic for many businesses this year, and the continuing uncertainty around regulation in the headlines has not made things any easier. Some businesses may feel that they need to hold back on innovating or investing in this area until there is more clarity around how different jurisdictions will approach regulation.

Solely UK-based businesses can perhaps take some comfort from the government’s consistent pro-innovation stance and the knowledge that stringent AI regulation is unlikely to be imposed in the near future in the UK. It should be noted, however, that the AI Act does have extraterritorial scope in a similar way to the GDPR, and so it is advisable for all businesses to consider this. Global businesses will have to continue to keep an eye on the ever changing landscape of impending regulations in this area to ensure they can plan ahead accordingly.

If the UK does decide to follow suit on the EU-approach, this would create a harmonised approach across Europe on AI, how it can be developed, what it can be used for and the consequences of non-compliance with these rules. This could be beneficial for businesses operating in the EU & UK in the sense of complying with a consistent set of rules across the market as a whole whilst also offering security for consumers. However, with the AI Act being as prescriptive as it is, this will be no small task for businesses who develop or are heavily reliant on the technologies.

For all businesses, there will be a continued balancing act of being able to harness the benefits of AI for their own purposes whilst also ensuring that ethics, transparency and legal compliance are adequately addressed in the process. The hope is that in 2024, the regulatory landscape will become more settled in many key jurisdictions for global businesses and that this will help to find that balance.