Business

British businesses are in danger of being left stranded in the middle of the pack on artificial intelligence, with a new PwC study revealing a significant gap between UK firms and the world’s top AI adopters in both spending and returns.

The consultancy’s global survey found that while leading companies worldwide are investing an average of five per cent of revenue in AI and reaping returns of 15 per cent, their British counterparts are committing just two per cent and generating returns of ten per cent. It is a gap that should alarm boardrooms across the country, particularly among small and medium-sized enterprises already grappling with tight margins and limited budgets for technology transformation.

Perhaps more troubling is the innovation shortfall the figures suggest. UK businesses derived only 27 per cent of their revenue from products that did not exist three years ago, compared with 43 per cent among global leaders. For SMEs, which have historically relied on agility and fresh thinking to compete against larger rivals, that disparity ought to prompt some uncomfortable questions about whether enough is being done to turn AI capability into genuinely new commercial offerings.

The research points to familiar obstacles. Outdated IT systems and rigid internal processes continue to hold companies back, with only 27 per cent of UK businesses having redesigned their workflows to properly integrate AI rather than simply grafting it on to what already exists. The same proportion had modernised legacy technology to better accommodate the tools.

There is also a question of ambition. Nearly half of the UK businesses surveyed said efficiency and productivity were their primary motivation for experimenting with AI, while just 26 per cent cited revenue generation. It is a mindset that Leigh Bates, PwC UK’s global risk AI leader, believes is limiting the country’s potential.

Bates described the findings as a wake-up call, arguing that too many firms remain trapped between piloting AI projects and scaling them effectively. The businesses seeing the greatest returns globally, he said, are not merely doing more of the same but fundamentally reinventing how they operate.

Overall, the UK ranked 11th out of 19 countries in PwC’s assessment, behind China at the top of the table, as well as France, Germany and Saudi Arabia. The United States, notably, fared little better at 13th. PwC defined global leaders as companies in the top 20 per cent of AI-driven performance.

For Britain’s SME community, the message is clear enough. The window to move from cautious experimentation to meaningful adoption is narrowing, and those that continue to treat AI as little more than a cost-cutting exercise risk discovering that their competitors, at home and abroad, have already moved on.

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UK firms risk being left behind as AI adoption gap widens, warns PwC

Virgin StartUp has launched applications for the second round of Momentum, its free eight-week accelerator programme built specifically to help dyslexic entrepreneurs grow their businesses.

Momentum 2.0, which runs from 26 May to 14 July 2026, returns after what Virgin StartUp described as the most applied-for programme in its history. The inaugural cohort supported 30 founders last year, with nine in ten participants saying they came to view their dyslexic thinking as a strength by the time they finished. The programme is backed by Virgin Unite and run in collaboration with Made By Dyslexia, the global charity founded by Kate Griggs.

The accelerator is aimed at early-stage founders and offers a combination of tailored workshops, one-to-one mentoring and practical resources designed around the way dyslexic thinkers naturally operate. Virgin StartUp has also introduced a dedicated “Dyslexic Thinking” space within its online community for business founders, extending the programme’s reach beyond the cohort itself.

The commercial case for backing dyslexic entrepreneurs is well documented. Analysis from Made By Dyslexia suggests that dyslexic business owners contribute at least £4.6 billion to UK GDP annually and support more than 60,000 jobs. The charity estimates that one in three entrepreneurs is dyslexic, a statistic that underlines how closely entrepreneurial instinct tracks with the pattern recognition, creative problem-solving and big-picture thinking commonly associated with dyslexia.

Elle Upshall, scale up lead at Virgin StartUp, said the response to the first cohort had exceeded expectations and that the programme had demonstrated what happens when business support is designed around different ways of thinking rather than in spite of them.

Among the alumni of the first Momentum cohort is Alex Molokwu, founder of Loujo, an initiative that uses educational songs to help dyslexic children with reading and writing. Molokwu credited his mentor with helping him turn instinctive thinking into structured strategy. Aylin Abdullah, founder of Fractionals Match, an AI-powered marketplace for scaling businesses, said the programme gave her the space to articulate and lean into how she thinks, rather than treating it as something to work around.

Griggs, herself a dyslexic social entrepreneur, framed the initiative in broader economic terms, arguing that the UK has never needed dyslexic thinking more if it wants to unlock growth and innovation.

Momentum sits within a wider push across the Virgin Group to champion neurodivergent talent, inspired in large part by Richard Branson’s own experience with dyslexia. The ambition extends beyond the cohort: by helping dyslexic founders scale, the programme aims to drive job creation and inspire the next generation of entrepreneurs.

Applications for Momentum 2.0 close on 8 May 2026. Full details are available at virginstartup.org/momentum.

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Virgin StartUp opens second round of free accelerator for dyslexic entrepreneurs

Britain’s finance chiefs have retreated into full defensive mode as the fallout from the war in Iran sends confidence tumbling to levels not recorded since the country was plunged into its first coronavirus lockdown more than six years ago.

Two of the most closely watched barometers of corporate sentiment, Deloitte’s monthly CFO survey and BDO’s output index, paint a picture of a business community bracing for prolonged turbulence rather than plotting for growth. The message from boardrooms is unambiguous: conserve cash, cut costs and wait for the storm to pass.

Deloitte’s survey places CFO confidence at a six-year low, with geopolitics once again cited as the single greatest external threat. The firm’s chief economist, Ian Stewart, said the Middle East conflict had delivered a genuine shock, dragging optimism back to the darkest days of the pandemic. For finance leaders accustomed to navigating uncertainty, the comparison is a sobering one.

BDO’s figures tell a similarly bleak story. Business output contracted last month for the first time since February 2021, with services and manufacturing bearing the brunt. Scott Knight, the firm’s head of growth, pointed to soaring energy and commodity prices as the principal culprits, noting that a fragile truce between Washington and Tehran had offered only fleeting respite.

The knock-on effects are already filtering through the economy. Higher commodity costs are eroding manufacturers’ margins, while both businesses and consumers have begun tightening their belts in anticipation of rising inflation. Deloitte found that business leaders are most anxious about the war’s impact on energy prices, inflation and interest rates, all of which economists now expect to climb this year. The spectre of increased cyber-attacks, potentially orchestrated by state-sponsored actors, is adding a further layer of unease.

The labour market is feeling the chill. BDO’s employment index has slumped to a 15-year low as firms signal that inflationary pressures will curtail their ability to take on new staff. Hiring demand, the accountancy firm warned, is likely to remain subdued for the remainder of 2026. A separate report from KPMG and the Recruitment and Employment Confederation found that permanent placements and worker demand continued to fall in March, albeit at a gentler pace than in preceding months. Wage growth, meanwhile, was described as marginal.

There is a slender thread of hope. Jon Holt, chief executive of KPMG, suggested that the prolonged decline in hiring activity may be starting to level off. Yet he was quick to caution that any meaningful recovery hinges on greater clarity over the trajectory of the conflict and its wider economic consequences. Without that, he warned, hiring decisions and capital investment risk being deferred once more, stalling any sustained improvement in the jobs market.

For now, the overwhelming priority among Britain’s finance chiefs, many drawn from the FTSE 100 and FTSE 250, is balance sheet resilience. The vast majority told Deloitte they intend to pare back both spending and recruitment in the months ahead. As Stewart put it, rarely in the past 16 years have UK CFOs been so single-mindedly focused on controlling costs.

It is a posture born not of panic but of hard-headed pragmatism. Until the geopolitical fog lifts and energy markets find some semblance of stability, corporate Britain appears content to hunker down and ride it out.

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UK business confidence crashes to Covid-era lows as Iran conflict forces firms into survival mode

Some of Britain’s most prominent entrepreneurial voices are pressing the Treasury to introduce a targeted tax incentive designed to keep the proceeds of successful exits circulating within the domestic start-up ecosystem, rather than drifting into passive wealth management or overseas opportunities.

The proposal, which has been dubbed “repeat entrepreneur relief”, would allow founders who sell shares in their companies and reinvest the gains into a new venture within twelve months to defer capital gains tax indefinitely. The liability would only crystallise when the new shares were eventually sold without further reinvestment.

The idea has been put forward in various forms by the Founders Forum Group, Schroders and UK Private Capital as part of a recent Treasury consultation on the tax treatment of entrepreneurs. Each submission makes broadly the same case: that the UK’s tax framework does a reasonable job of supporting businesses as they grow, but does far too little to encourage founders to recycle their capital and experience once they have cashed out.

UK Private Capital, the trade body representing venture capital and private equity firms, argued there is a compelling rationale for aligning tax incentives with the post-exit phase, when founders hold significant capital, possess hard-won operational expertise and face decisions about where to base themselves and where to deploy their money next.

The Founders Forum Group, co-founded by Brent Hoberman and Jonnie Goodwin, drew a comparison with the American Qualified Small Business Stock scheme, under which founders pay no capital gains tax on gains of up to $10 million or ten times their original investment. The group described that exemption as a primary driver of the reinvestment culture that has long defined Silicon Valley, where exit proceeds are routinely funnelled straight back into the next generation of companies.

A survey conducted by the Founders Forum Group found that nearly nine in ten founders said such a measure would make them more likely to reinvest in the UK, with more than seven in ten describing the effect as significant.

The lobbying comes at a sensitive moment for the government’s relationship with the entrepreneurial community. Since taking office, Chancellor Rachel Reeves has progressively increased the rate of business asset disposal relief, the levy formerly known as entrepreneurs’ relief, from its longstanding rate of ten per cent to fourteen per cent last year, then to eighteen per cent from this month. The standard capital gains tax rate remains at twenty-four per cent.

Many founders have argued that the increases make Britain a less attractive place to build and exit a business, though a number of tax analysts have countered that the previous relief was poorly targeted and did relatively little to encourage genuinely productive reinvestment.

The government has sought to balance these changes with fresh incentives at the earlier stages of the company lifecycle. In November, Reeves extended a package of measures making it easier for founders to offer equity to employees and raise capital, provisions that came into force last week.

A Treasury spokesperson pointed to these steps as evidence that the government has the right economic plan in place, highlighting changes to the enterprise management incentive scheme and venture capital tax schemes that are expected to support around £100 million of additional investment annually.

Whether the Treasury is willing to go further and address the post-exit gap that the lobbying groups have identified remains to be seen, but the volume of submissions suggests the argument for repeat entrepreneur relief is gathering serious momentum.

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Founders push for ‘repeat entrepreneur relief’ to keep exit capital flowing back into UK start-ups

The decision by OpenAI to plant its flag in King’s Cross with a permanent London headquarters, just days after walking away from a major data centre project in the northeast, tells you something important about where the real value lies in Britain’s artificial intelligence ambitions: it is in people, not power grids.

The ChatGPT developer has secured an 88,500 sq ft space in the Regent Quarter capable of housing 544 staff, a clear signal that it intends to more than double the roughly 200 employees it currently has working across research, engineering, policy, marketing and sales in the capital. Around 30 of those are researchers, and the company has committed to making London its largest research hub outside the United States.

The move comes at a politically awkward moment. Last week OpenAI shelved its Stargate data centre plans for Cobalt Park in North Tyneside, citing high energy costs and uncertainty around the future of UK copyright law. That project would have seen some 8,000 Nvidia chips deployed in a designated AI growth zone and was widely regarded as a cornerstone of Sir Keir Starmer’s ambitions to bolster Britain’s sovereign computing capacity.

Benedict Macon-Cooney, chief AI and innovation officer at the Tony Blair Institute, captured the tension neatly, noting that whilst Britain excels as a hub for talent, it continues to struggle to secure the large-scale AI infrastructure needed to compete globally.

But not everyone views the data centre retreat as the more telling indicator. Saul Klein, founder of venture capital firm Phoenix Court, argued that signing a commercial property lease is a far stronger commitment than headline-grabbing announcements about hyperscale compute. Leasing office space and filling it with people, he suggested, is not something a company can easily walk away from.

Klein’s firm has dubbed the King’s Cross corridor the world’s third most productive technology cluster after San Francisco’s Bay Area and Beijing, home to thousands of venture-backed companies and more than 200 unicorns. The neighbourhood already counts Google DeepMind, Meta, University College London, the Francis Crick Institute and the Alan Turing Institute among its residents, alongside homegrown AI success stories such as Synthesia and Wayve. Its proximity to King’s Cross, St Pancras and Euston also gives it unrivalled connectivity across Britain and into mainland Europe.

OpenAI is not alone in eyeing London for expansion. Anthropic, its closest rival, is understood to be in discussions with both the London mayor Sir Sadiq Khan and the government about growing its own UK presence, where it also employs around 200 people.

The government, meanwhile, has sought to reinforce Britain’s credentials in fundamental AI research, announcing £40 million in funding over six years for a new blue-sky research laboratory.

Phoebe Thacker, OpenAI’s global head of data research programmes and London site lead, pointed to the depth of British talent and the growing adoption of AI tools across UK businesses and institutions as key drivers of the investment.

For the UK’s technology sector, the message is encouragingly clear: even when infrastructure plans falter, the gravitational pull of world-class talent remains irresistible.

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OpenAI doubles down on London with first permanent office despite Stargate U-turn

Britain’s high streets enjoyed a welcome lift last month as an early Easter drew shoppers back through the doors, but retailers are warning that the bounce may prove fleeting as a fresh wave of tax rises and wage costs bears down on the sector this month.

Total UK footfall climbed 2.4 per cent year-on-year in March, according to figures from the British Retail Consortium (BRC), reversing a grim start to the year that saw shopper numbers fall by 0.6 per cent in January and a chastening 4.5 per cent in February as persistent wet weather kept high streets quiet.

Yet behind the headline figure lies a more anxious story. The BRC cautioned that the Easter uplift, which arrived earlier than usual this year, fell short of what retailers had been banking on, leaving many in no mood to celebrate as April’s cost pressures begin to bite.

Shopping centres led the recovery with a 2.6 per cent rise, followed closely by retail parks at 2.5 per cent, while high streets themselves managed a more modest two per cent gain. Regionally, Manchester staged the strongest comeback, with total footfall surging by more than nine per cent, while London edged ahead of the national average at 3.3 per cent.

Helen Dickinson, chief executive of the BRC, struck a cautious note. With Easter and the school holidays falling earlier this year, she said, retailers had been expecting a stronger boost than March actually delivered. Warmer weather might help sustain momentum in the coming weeks, Dickinson added, but without a repeat lift in April the recovery was far from assured.

Andy Sumpter, retail consultant at Sensormatic, which compiles the BRC’s footfall data, was blunter still, suggesting that March would have recorded a decline altogether were it not for the Easter effect. He pointed to a worrying cocktail of falling consumer confidence, geopolitical uncertainty and rising living costs, not least at the petrol pump, as reasons shoppers are cutting back on discretionary trips. The real test, he argued, will be whether footfall can hold up once the Easter boost fades and tougher year-on-year comparisons return.

The mood among retail chiefs has been lifted, if only tentatively, by President Trump’s announcement of a two-week ceasefire, although that deal has since been cast into doubt. The BRC noted that a reopening of the Strait of Hormuz, should it materialise, could bring global energy prices back towards more manageable levels before the bulk of companies come to renew their supply contracts.

Even so, the warning lights on the retail dashboard remain firmly on. Trade bodies representing both retail and hospitality are sounding the alarm over mounting employment costs and April’s hike to business rates, which together threaten to swallow any windfall the Easter trade may have produced.

Dickinson urged ministers to do their bit by easing the burden of domestic policy costs, arguing that lower overheads would free operators to invest in value, experience and their in-store offer, the very things, she said, that help drive footfall and breathe life into local economies.

For Britain’s SMEs, which make up the bulk of independent high-street operators, the message from the data is unmistakable. Easter has provided a fleeting reprieve, but the structural pressures squeezing margins show little sign of easing. Whether March’s modest rebound proves to be the first swallow of summer or merely a brief interlude before tougher trading conditions return will, retailers fear, come down to decisions taken in Whitehall as much as on the shop floor.

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Easter lifts footfall but retailers brace for April cost squeeze

Rachel Reeves has been told by one of the world’s most influential economic bodies that Britain’s tax system is holding the country back and needs urgent surgery if the Chancellor is serious about reigniting growth.

In a pointed intervention, the Organisation for Economic Co-operation and Development (OECD) has urged the Treasury to launch an “in-depth tax review to make the tax system more efficient and growth-friendly”, arguing that decades of tinkering have left Britain with a patchwork of distortions, loopholes and outdated valuations that penalise enterprise and deter investment.

The Paris-based think tank’s latest assessment will make uncomfortable reading in Downing Street. It concludes that the UK economy is being dragged down not only by the familiar headwinds of elevated borrowing costs and sluggish productivity, but by a tax code that businesses have learned to game and that ordinary taxpayers increasingly struggle to understand.

At the heart of the OECD’s recommendations is a call to broaden the VAT base, stripping out a thicket of reliefs and exemptions that economists describe as “largely inefficient and regressive”. It is the sort of reform that could finally consign to history the long-running absurdity of HMRC having to rule on whether a Jaffa Cake is a biscuit or a cake, the kind of grey area that has generated decades of tribunal cases and column inches. The OECD suggests that any additional receipts raised by closing such loopholes could be recycled to shield low-income households through targeted transfers.

Property tax comes in for similarly sharp criticism. The OECD notes that council tax bands still rest on property valuations taken in 1991, a state of affairs no government has dared to touch for fear of triggering a political backlash among homeowners whose rateable values no longer reflect the modern housing market. Successive chancellors have kicked the revaluation can down the road, leaving a levy that economists regard as one of the most distortive in the developed world.

For small and medium-sized businesses, the case for reform has long been obvious. Entrepreneurs, accountants and owner-managers have complained for years about the sheer complexity of the HMRC code, the punitive £100,000 to £125,000 tax trap that penalises aspiration, the interaction of income tax with student loan repayments, and the cliff edges that plague stamp duty. Each has become a case study in how good intentions, bolted on year after year, can produce a system nobody would design from scratch.

Britain once had a body specifically charged with addressing these frustrations. The Office of Tax Simplification, an arms-length outfit set up to cut administrative burdens, survived for 13 years before being abolished by Kwasi Kwarteng during his short-lived tenure as Chancellor. Its recommendations were frequently ignored even while it existed, and its closure was widely seen at the time as a signal that Whitehall had lost interest in serious structural reform.

The OECD’s warning lands at an awkward moment for Reeves. Several think tanks, including the Institute for Government, urged the Chancellor to pursue wholesale tax reform ahead of last year’s Budget, when she was scrambling to fill a fiscal black hole running into billions. She now faces similar pressures later this year, with the war in Iran weighing on global growth, interest rates stubbornly elevated and borrowing costs showing little sign of easing.

The report also strays into more politically charged territory, criticising the government over conflicts of interest in its dealings with business — a swipe that will inevitably be read in Westminster as a reference to the recent controversies surrounding Lord Mandelson and Labour Together, as well as the steady stream of former MPs moving into private sector roles that have raised eyebrows on both sides of the House. The OECD recommends that legally binding commitments on violations be extended to cover politicians’ post-public careers as well as their periods in office.

Among its other prescriptions, the think tank calls for a rethink of employee training subsidies funded through the apprenticeship levy, suggesting resources be redirected towards young people who are struggling to get a foothold in the labour market.

Responding to the report, a Treasury spokesperson said the government was “already reforming the tax system to make it more efficient, modern and fair”, adding that it was “tackling reliefs that are now costing far more than intended and are disproportionately benefitting the wealthy”.

Whether that amounts to the kind of root-and-branch overhaul the OECD is demanding, or simply more of the piecemeal tinkering that has brought the system to its current state, will become clearer when Reeves stands up at the despatch box later this year. For Britain’s SMEs, who bear a disproportionate share of the compliance burden, the hope will be that she finally grasps the nettle.

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OECD urges reeves to overhaul ‘inefficient’ UK tax system

Google has fired the opening shot in a battle for Britain’s restaurant booking market, rolling out an artificial intelligence tool that allows diners to secure a table without ever leaving the search bar.

The feature, which went live on Friday, invites users to describe the sort of meal they are after in plain language. Google’s AI then trawls the web for real-time availability and returns a shortlist of bookable options within seconds, collapsing what was once a multi-step hunt into a single query.

It represents a marked departure from the traditional search experience. Rather than directing punters off to comparison sites or third-party platforms, Google is now intent on keeping the entire customer journey, from the first idle thought about dinner through to a confirmed reservation, firmly within its own walls.

The Silicon Valley giant said appetite for smarter dining tools is growing sharply, pointing to a 140 per cent rise this year in search queries such as “when to book a table” as consumers demand faster and more tailored recommendations.

Listings will be drawn from partners including TheFork, Sevenrooms and DesignMyNight, yet the interface, and crucially the customer relationship, will sit squarely with Google. That raises awkward questions about who ultimately owns the diner and who profits from the transaction.

The move sets Google on a direct collision course with established players such as OpenTable, whose business has long depended on playing intermediary between restaurants and hungry customers. By intercepting users at the point of search and ushering them through to booking, Google threatens to disintermediate those platforms altogether and squeeze their margins in the process.

More broadly, the launch signals the dawn of a new phase in the AI race, one defined not by chatbots answering questions but by agents quietly completing tasks on the user’s behalf. The ultimate prize is a search engine that functions as a digital concierge, and for Google, controlling bookings delivers a rich seam of behavioural data that can be fed back into its advertising and recommendation machinery.

Britain, with its densely packed restaurant scene and enthusiastic take-up of online reservation platforms, offers an ideal proving ground before the technology is extended to adjacent sectors such as travel and live events. For the incumbents of the booking world, the writing may already be on the wall.

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Google takes on Opentable with AI that books your dinner in seconds

Thousands of small investors who piled into one of London’s best-known green investment vehicles are staring down the barrel of losses running well beyond 50 per cent, after the board of SDCL Efficiency Income Trust (SEIT) bowed to pressure from a New York activist and abandoned its rescue plan in favour of a managed wind-down.

The FTSE 250 trust, which has raised more than £1.1 billion from retail backers since its 2018 launch, confirmed today that it has shelved plans to convert itself into a conventional operating company and will instead begin selling off its portfolio of energy-efficiency assets.

SEIT becomes the latest London-listed trust to change course under the gaze of Saba Capital, the aggressive New York hedge fund run by Boaz Weinstein, which is understood to hold a stake of more than 10 per cent. Saba has built positions in dozens of British investment trusts over the past eighteen months, agitating for boards to be replaced and cash to be returned to shareholders.

For the army of private investors who subscribed to SEIT’s nine capital raisings between 2018 and 2022, the decision marks the bitter end of a story that once looked like a copper-bottomed route into the green transition. They were lured by an anticipated yield of 5 per cent or more at a time when base rates were on the floor, and placings were frequently several times oversubscribed. Their money went into projects ranging from rooftop solar arrays at Tesco supermarkets to electric-vehicle charging infrastructure and district heating schemes.

The trust’s fortunes reversed sharply once interest rates began their steep climb, and the market has grown increasingly sceptical about the values SEIT has placed on its unquoted holdings. The shares, which were issued at £1 or more, closed at 45p yesterday, a punishing 49 per cent discount to stated net asset value. If the portfolio is eventually liquidated anywhere close to recent market prices, the collective hit to shareholders could exceed £500 million.

Tony Roper, SEIT’s chairman, said the board had held intensive talks with wealth managers, retail platforms and other large holders, and that the feedback had been clear. Many had expressed what he described as “a clear preference for liquidity” over the proposed run-on plan. Saba is believed to have been among those consulted.

The directors, he said, had “unanimously concluded” that a managed wind-down of the portfolio was now in the best interests of shareholders taken as a whole. Roper acknowledged the pain felt by loyal backers, saying the board was “acutely aware of the reduction in share price in recent years” and recognised the frustration and uncertainty that had caused.

The alternative on the table had been to delist the investment trust wrapper, retain the stock market listing as an ordinary trading company and carry on running the assets. Roper conceded that, in theory, such a route “could have created value significantly in excess of the current share price”, but said it carried meaningful execution risk that shareholders were unwilling to stomach.

SDCL, the manager founded and led by energy-efficiency evangelist Jonathan Maxwell, has agreed to what the trust described as minimised termination fees, a nod to the sensitivity around what retail backers might otherwise regard as rewards for failure.

Analysts at Barclays said the activist presence on the shareholder register had made an orderly wind-down the more probable outcome all along. In their view, the shift “provides clearer line of sight to value realisation”, though they warned that the process would stretch out over an extended period and that disposal pricing remained a live risk.

There is already a cautionary data point. SEIT recently offloaded a batch of assets for £105 million, a 9 per cent discount to the value at which they had been carried in the books, a reminder that the private market for infrastructure assets remains sticky and that further haircuts are likely as the wind-down gathers pace.

The SEIT decision lands squarely within a broader assault by Saba on the £270 billion investment trust sector. Edinburgh Worldwide Investment Trust and Impax Environmental Markets are both midway through exit tender offers that their boards have argued are necessary to prevent ordinary shareholders being trapped in vehicles increasingly controlled by the American fund. Several other trusts have pre-emptively announced buybacks, continuation votes or strategic reviews in an attempt to keep Saba at bay.

For SME owners and retail savers who were encouraged to view specialist investment trusts as a low-drama way of backing the energy transition, the unravelling of SEIT is a sobering lesson. A yield that looks generous in a zero-rate world can evaporate quickly when gilts start paying 4 per cent, and unlisted infrastructure values that held up well on paper do not always survive contact with a real buyer. With Saba now a fixture on share registers from Leith Walk to Bishopsgate, more boards are likely to find themselves weighing whether to fight, fold or hand the cheque book back to investors.

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Retail backers of SEIT face wiping out half their money as green trust raises the white flag

Sir Keir Starmer’s pledge to forge Britain into an artificial intelligence “superpower” has suffered its most embarrassing setback to date, after OpenAI quietly shelved its flagship Stargate UK data centre project, pointing the finger squarely at ruinous industrial energy prices and a muddled copyright regime.

The ChatGPT developer confirmed on Thursday that it was pausing the scheme, which had been unveiled with considerable fanfare last September during President Trump’s state visit. Stargate UK was meant to be the crown jewel in a £31 billion package of American technology commitments that also included £22 billion from Microsoft and £5 billion from Google. OpenAI, tellingly, never put a figure on its own pledge.

Built in partnership with chip giant Nvidia and London-based Nscale, the project was sold to ministers as a “major step” towards building sovereign British compute capacity, initially deploying some 8,000 graphics processing units in the first quarter of this year and scaling to roughly 31,000 chips thereafter. Sam Altman (pictured), OpenAI’s chief executive, had talked up its potential to turbocharge scientific research, lift productivity and juice economic growth, the very metrics the Labour government has staked its credibility on.

For the hundreds of thousands of small and mid-sized British firms eyeing AI as a route to efficiency and competitiveness, the climbdown is more than symbolic. Without domestic compute power at scale, SMEs risk being pushed further down the queue behind American and European rivals who can plug into cheaper, closer infrastructure.

Sam Richards, chief executive of the pro-infrastructure campaign group Britain Remade, did not mince his words. He described the pause as “a stark warning” that Britain was becoming prohibitively expensive to build in, arguing that no country saddled with some of the developed world’s steepest industrial electricity tariffs could credibly call itself an AI superpower. Investors, he warned, would simply take their chequebooks elsewhere.

An OpenAI spokesman insisted the company remained committed in principle, saying it would press ahead with Stargate UK once “the right conditions” on regulation and energy costs allowed for genuine long-term infrastructure investment. London, the spokesman noted, remained the firm’s largest international research hub, and OpenAI was continuing to expand its local headcount and roll out frontier AI tools within public services.

Behind the diplomatic language, however, lies a more pointed grievance. OpenAI made clear that the government’s U-turn on copyright reform was a significant factor in its decision. The company had been lobbying aggressively for a regime that would have permitted AI developers to hoover up copyrighted material to train their models unless rights holders explicitly opted out. After a fierce backlash from authors, musicians, publishers and much of the wider creative industries, ministers scrapped the proposal and now insist they have “no preferred option” on the way forward.

While the original Stargate announcement pitched the British chip cluster at “specialist use cases” in the public sector, regulated industries such as financial services, academic research and national security, OpenAI pointedly avoided any reference to training models on UK soil. The firm has now conceded it wanted the “freedom and the options” to deploy that local capacity as it saw fit — a euphemism, critics will say, for the very training activity at the heart of the copyright row.

The economics of the decision are, however, harder to spin away. Hyperscale data centres are voracious consumers of electricity, and the United Kingdom continues to lumber large industrial users with some of the highest power prices in the OECD. For a sector in which marginal costs dictate where the next gigawatt of capacity lands, Britain’s energy bill is an increasingly difficult sell in Silicon Valley boardrooms.

A Whitehall spokesman said the government was continuing to work with OpenAI and other leading AI firms “to strengthen UK compute capacity”, though officials privately acknowledge the optics are bruising.

The retreat also dovetails with a broader tightening of focus inside OpenAI itself. Valued at an eye-watering $852 billion at its most recent fundraising, the company is widely expected to press the button on a blockbuster stock-market flotation later this year, and has been busily jettisoning what insiders have dubbed “side quests”. In recent weeks it has pulled the plug on its Sora video-generation app, binned plans for an adult-oriented chatbot and quietly wound down an experiment in e-commerce.

Nscale declined to comment. Nvidia had not responded to a request for comment at the time of writing.

For British business, the message is uncomfortably clear: without urgent action on energy costs and regulatory clarity, the much-vaunted AI gold rush may end up passing these shores by.

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OpenAI pulls plug on Stargate UK, leaving Starmer’s AI superpower pitch in tatters