IoD responds to Chancellor’s Mais lecture

Anna Leach, Chief Economist at the Institute of Directors, said:

“The Chancellor’s focus on driving up productivity and investment are the right ones. Enhancing growth resilience is ever more vital as the UK continues to be buffeted by shocks. Reinforcing the UK’s trade connections, maximising opportunities across regions and gripping the AI opportunity are sensible priorities. And doing so hand-in-hand with business will help shape policies that will work in practice. It is good to see policy consistency coming through, for example through policies to deliver Oxford-Cambridge and Northern growth corridors. And there’s a welcome reference to the role regulation can play in inhibiting investment by businesses – this regularly appears in the top four factors negatively affecting investment amongst business leaders.

“We welcome the Chancellor’s focus on empowering every region of the UK through targeted investment, stronger city‑region leadership and a roadmap to fiscal devolution. We particularly support measures that back local strengths, including the city investment funds and clusters investment programmes, as these will help unlock private investment and create high‑quality jobs.

“These are a good set of measures aimed at helping to lift investment and growth. However, businesses continue to report that the main factors constraining their ability to invest are significant rises in employment costs and high levels of uncertainty. While swift and consistent delivery of these policies will be welcome, it must be accompanied by action to address the cost of doing business in the UK.”

In response to the Chancellor’s proposals for backing AI and innovation, Dr Erin Young, the IoD’s Head of Innovation and Technology Policy, said:

“We welcome the government’s continued ambition for the UK to lead the G7 in AI adoption, alongside its commitment to scaling quantum computing. The £2.5 billion investment in AI and quantum, including a new AI Economics Institute and AI Adoption Business Summit, reflects a clear recognition that these technologies are critical to long-term growth.

“It is right that digitalisation and AI adoption are positioned as foundational to a more productive, competitive and resilient economy. We are also encouraged to see this linked to closer European collaboration and regional growth. Technology does not exist in isolation, depending on strong talent pipelines and markets to succeed.

“However, AI cannot be treated as a universal solution to productivity challenges. A nuanced approach, grounded in sector-specific contexts, safety and public trust, will be essential.

“Equally, leadership must be built on sovereign capabilities. The UK should not only deploy technologies developed elsewhere, but ensure that British companies are starting, scaling and succeeding at home. The £500 million Sovereign AI Unit and procurement commitments are positive steps, but impact will depend on effective execution.

“Above all, the test will be scalable delivery. For many SMEs, the immediate pressures of costs, energy and regulation remain acute. Policy remains fragmented, with limited coordination across technology, finance, energy and skills, and tech adoption support mechanisms are often hard to navigate and insufficient to offset the risks and costs. If the UK is to translate ambition into real leadership, the roadmap must connect frontier innovation with the operational realities and enabling conditions for businesses on the ground.

“The direction is clear. The urgent priority now must be moving from vision to meaningful and responsible AI diffusion, underpinned by clear governance frameworks, and detailed, measurable and evidence-based implementation.”

Responding to the proposals for constructing a new economic partnership with the EU, Emma Rowland, Trade Policy Advisor at the IoD, said:

“We support all efforts to improve the UK’s trading relationship with the EU, something business leaders see as a key confidence booster looking into the long term. It is especially important that the UK seeks to deepen cooperation with its closest and biggest trading partner given the impact that global conflict is having on the trading landscape.

“We welcome dialogue on strengthening relations and removing friction, and firms continue to express positive sentiment on broader regulatory alignment in helping to remove administrative barriers to trade. However, the government should tread a careful balance between prioritising quick economic gains and achieving the best regulatory outcomes for the UK’s own businesses and wider society.

“We would urge the government to provide greater specificity on the long-term goals for the UK-EU reset. There is still a lack of clarity on what the finished reset product looks like within the parameters of the UK and EU’s respective red lines, how it fits into the broader objects of the UK’s trade strategy, and how the government plans to shape the regulatory relationship so that it benefits both the economy and business environment.”