Britain should be Europe’s Silicon Valley. One thing is stopping it

This week, founders, investors and politicians from across Europe are gathering at London Tech Week, united by a simple message: they want to build a strong, innovative Europe, and they have the talent and drive to do so. Britain can become Europe’s Silicon Valley – but only if political leaders are prepared to seize the opportunity.

This country’s future will be defined by a harsh truth: technological disruption is inevitable, but prosperity is not. The countries that win in the coming decades will be those willing to take risks and back innovation. The countries that lose will be those trapped defending old systems, over-regulating growth and avoiding difficult decisions.

Britain needs to decide which one it wants to be.

This is not some abstract debate for “tech bros”. It matters to anyone who wants a functioning NHS, a sustainable welfare system and a future where children will be better off than their parents.

But for Britain to continue to have these things, the country must be rich, and to be rich in this age of technological change, the UK must be part of it, not watching from the sidelines.

At the heart of the country’s economic struggles is a central weakness that must be fixed: risk aversion. This is not a cultural problem, as is often implied, but institutional.

Historically, Britain prospered because its institutions rewarded experimentation and commercial ambition. But over time, that changed. Today, many incentives across government point in the opposite direction, favouring downside risk minimisation rather than giving people the agency to make bets.

Examples are plentiful. British pension funds allocate only one per cent to UK private markets, prioritising smaller, safer returns. Unleashed British pensions would help drive capital into the next generation of British companies and also provide far greater returns to pensioners.

British energy prices are too high, and the planning system is too slow. In practice, this makes investors far less likely to back high-risk, high-reward deep-tech companies. But these companies will be essential for creating jobs and driving growth, and they are also often the ones that could draw on Britain’s advantages outside London, from Coventry to Milton Keynes. Cheaper power paired with effective planning must be a priority.

The UK has world-class universities but only a small number of them drive a disproportionate share of Britain’s scientific excellence, and even those are often dwarfed by private-sector contributions. Faced with financial pressure, many universities are becoming more risk averse and less entrepreneurial.

Meanwhile, the economy is becoming less dynamic. The labour market is becoming more rigid at the exact moment flexibility matters most. Fewer new businesses are being created and fewer are failing, indicating that established companies are prevailing while challengers struggle to break through. Denied the opportunity to take more risks, British companies are unable to create more jobs even if they wish to do so.

Above all, we need political leadership. Technological change may be one of the greatest challenges of our time, and only by embracing it early can Britain share in its rewards.

But rather than engaging directly in this difficult debate and confronting the questions that will define the country’s economic future, politicians instead retreat to the comfort of old fault lines around tax and spend. These old levers of growth are no longer enough. The UK cannot borrow or regulate its way to prosperity, nor can it rely on importing low-wage labour to mask weak productivity and jobs. The only way to create national prosperity in an age of massive technological disruption is through dynamism.

The technological revolution is already here, today. The problems and the solutions are known; the question now is who is willing to make the argument – and secure the country’s future in the process.

Keegan McBride is director of Science & Technology at the Tony Blair Institute