TL;DR
Mid-tier accountancy firm Moore Kingston Smith reduced fraud report completion from two weeks to two hours using AI, achieving 8 percentage point profit margin improvements. Britain’s services-heavy economy (80% of GDP) positions the country to gain disproportionately from AI adoption according to Moody’s, though economists predict only 0.1-0.2 percentage point annual growth additions near-term. Seventeen percent of private sector employers plan AI-driven headcount reductions over 12 months.
Services Sector AI Advantage
When Moore Kingston Smith deployed artificial intelligence across operations, profit margins jumped significantly. Teams running corporate fraud checks completed customer reports in two hours—work previously requiring two weeks. The mid-tier firm’s experience raises hopes that Britain can escape two decades of productivity stagnation ahead of Wednesday’s budget.
Services comprise 80% of Britain’s economy, matching the United States but representing a larger private sector share once state-provided services are excluded. Economists suggest this composition positions the UK for higher AI rewards in powerhouse sectors like accountancy and finance. Ratings agency Moody’s confirmed Friday that Britain could gain more than other countries from AI advances.
Measurable Impact and Implementation Patterns
MKS applies its Google Gemini 2.5-based platform across 1,500 UK staff to growing work ranges. Becky Shields, head of digital transformation, reports teams using AI four times more intensively than colleagues achieved 8 percentage point higher profit margins. Rather than requesting sample transaction documentation, clients were able to upload entire datasets which MKS was able to analyse automatically.
Initial setup work now pays dividends through wider application, with reduced paperwork attracting clients specifically choosing the firm for AI adoption. Shields characterises AI costs as “pennies in the pound” compared with other technology investments, whilst noting large language models improve continuously with each iteration.
Productivity Imperative and Economic Outlook
Improving productivity represents a major challenge for Britain’s economy and Prime Minister Keir Starmer’s government. Expected budget forecaster downgrades of underlying growth potential—reflecting past disappointments—will create public finance pressures, likely forcing Finance Minister Rachel Reeves to increase taxes Wednesday.
University of Manchester’s Bart van Ark predicts AI adding 0.1-0.2 percentage points to annual growth near-term—helpful for an economy growing around 1.5% annually but insufficient to spare tough budget choices. Capital Economics’ Paul Dales anticipates AI accelerating mid-2030s growth, with Britain seeing greater adoption than European peers due to lighter regulation and more flexible labour laws.
Looking Forward
Bank of England Governor Andrew Bailey warns against expecting immediate impact, noting 40 years passed between Edison’s light bulb and electricity appearing in productivity statistics. Near-term risks include gains flowing primarily to larger firms with investment capacity, potentially reducing competition and aggravating geographic imbalances. Chartered Institute of Personnel and Development surveys show 17% of private employers plan AI-driven headcount reductions over 12 months, with only 6% planning increases—suggesting workforce transformation precedes broad productivity gains.
Source: Reuters