The UK needs to understand digital sovereignty as we enter the AI era

Digital sovereignty is the agency and capacity of a nation to make intelligent, informed choices to shape its digital future. The will and the means. Without a clear vision and plan for how to achieve both, the UK risks relinquishing control over policymaking by depending on monopolist international platforms. This could leave us with a degraded state, and hinder our businesses and entrepreneurs in the global market.

We start from a weakened position. After decades of outsourcing our data, skills and capacity we have an unwieldy, expensive state reliant on a spaghetti of monopoly and oligopoly supply chains. Big IT contracts have put up barriers to innovation and competition while services struggle to serve, let alone innovate. Ask a sub-postmaster.

With the progress made towards digitisation of public services should have come a new group of market players. But the historic Treasury approach to seeing technology through a narrow lens of big contracts with chosen suppliers has throttled our growth. Meanwhile, frustrated, world-class British talent gets snapped up by others. The sale of Deepmind to Google is now regretted in Whitehall but there is too little thought to creating and supporting the next Deepmind. We seem to be structurally incapable of scaling our start-ups by using public infrastructure and investment.

Health is a salutary example of how the UK has so far squandered opportunities for sovereign market shaping. The now abolished NHS England failed to create a competitive ecosystem. It has taken 5 years since the NHS app’s launch and a decade of vendor haggling before that to make basic GP records available. Primary care is left with a duopoly of providers and no room for competition. In secondary care, we have spent a decade attempting to reverse-fit US billing systems to run our hospital trusts, in the mistaken belief that once these systems ‘converge’ then we will be able to innovate using them. Finally, Palantir’s health data platform looks likely to inhibit the growth of the UK AI health market. We can forget sovereign AI innovation in our wider health system with foundations like these.

Despite a laudable commitment to a 10 year infrastructure investment and the development of AI zones, the UK may end up building the foundations for other countries' successful technologies, leaving our future policy choices dependent on their support. This in an environment where voters desire for governments to deliver change and take back control. The stakes are very high: If progressives can’t deliver, populists may step in and may use AI technologies in unwanted ways.

Elsewhere, the digital sovereignty game is already afoot. In Europe, Denmark is noisily ejecting Microsoft from its public space, Germany is piling investment into Helsing, its AI defence play, while President Macron is often seen with Mistral, France’s AI big-bet, in attendance. Europe is finally backing the 28th regime: a legal framework aimed at start-ups and scale-ups which will help make a single market of the region's 450m population, and allow capital to drive the flywheel effects of innovation and growth often seen in Silicon Valley. With a newly addressable market and promises of AI Gigafactories and ‘Apply AI’ strategies to drive AI adoption in sectors where Europe is strong, we may at last see a joined-up response to the US platform play.

The BRICS sovereignty platforms are maturing into the AI space at pace, reshaping global technology markets. India’s tech stack serving 1.4bn domestic users is now offering Bhashini, an AI language translation service. Singapore is using AI in its SingPass identity system to combat fraud. The hyperscalers' line that they are the only option other than Chinese dominance is being disproved at pace, and in places without legacy technology.

The current UK choice architecture for AI adoption, basically an ‘Open for Business’ approach with agreements penned with international AI start-ups like Canada’s Cohere and Open AI, does little for the domestic players. We appear to be takers, not makers.

UK AI founders question our deals with the national AI favourites of other nations. Backing our own sovereign AI firms by giving them capital, access to public investment, ring-fenced public markets and throwing large public policy issues at them to solve would be a start. We urgently need to define and design the shape and size of the AI market we desire. State-backed technology plays, like the Pix payment engine in Brazil which is drawing the ire of the Trump administration, are delivering sovereign outcomes all over the world. If we see the AI economy through an outdated Big IT approach our sovereign policy making will go the same way as our sovereign tech industry: With limited access to public funds, lacking scale and capital, foreign owned.

We should be optimistic. We have the leaders, innovators and the engineering skills, so why not back them with ambition and scale?

This article originally appeared in the Financial Times, 16 September 2025.