Britain cannot win AI race with world’s highest energy prices
Key Points
- City leaders warned UK energy prices threaten its AI ambitions
- AI-driven growth is increasing demand for power
- Energy affordability is now a parameter of global competition
- Report urged boards to treat energy cost as a growth constraint
- Experts said failure to innovate risks London stagnating
The UK cannot compete in the global AI race while carrying some of the highest energy prices in the world, a City industry leader has warned.
“If we think we can be successful with some of the highest energy prices in the world, we will find out that we cannot,” the industry leader said in a report on the future of the City of London published by law firm Addleshaw Goddard in July 2026.
The report, based on interviews with 26 senior leaders across financial services, government and industry, found that energy arose repeatedly in interviews as an era-defining challenge for every aspect of the UK economy.
It warned that as AI-driven growth increases demand for power, affordability and availability have become the parameters of competition between countries.
Addressing the challenge quickly would create momentum, the report said, and both public policy and private investment must work together to carve out a solution.
The warning came alongside broader concerns about the pace of UK innovation.
Contributors agreed that technology will be the driving force behind London’s financial services growth, with one expert saying the effect of AI on financial services is going to be enormous and transformative. Another said the UK will be a natural winner if it has policies that promote the use of AI.
Interviewees identified AI, distributed ledger technology, tokenisation and digitalisation across financial services among the strategic industries that could stimulate UK-wide growth, alongside defence, clean energy and life sciences.
The downside was also set out. “If we fail to innovate? I think London probably then stagnates and loses relevance. Because the world isn’t standing still, and the most talented, the most mobile capital, will go to places that are doing things that are innovative and business friendly,” one leader said.
The report listed ensuring competitive energy pricing as AI-driven growth increases demand among the actions leaders would tell their younger selves to take, and urged businesses to treat energy cost, productivity and tech adoption as board-level constraints and act now to prevent them capping growth later.
The same energy costs flagged as a brake on AI investment continue to hit UK households, which pay among the highest electricity prices of any major economy.
