UK's Economic Growth: Stuck Between Brexit and AI Hopes

The UK's economic growth is currently facing a tough situation. The government's recent budget didn't include any big plans to boost the economy. The Office for Budget Responsibility said none of the measures would add at least 0. 1% to GDP over five years. This leaves the UK relying on two main hopes: a big boost from artificial intelligence (AI) or better trade ties with the European Union (EU). AI could help the UK's economy, especially since the country's private sector is mostly made up of services like accounting and finance. But experts think a big jump in productivity from AI in the next few years is unlikely. The Office for Budget Responsibility predicts AI will only add 0. 2 percentage points to productivity growth over the next five years. As for trade with the EU, the UK's Prime Minister Keir Starmer has started talking more openly about reducing trade frictions with the EU. He said the UK needs to accept trade-offs for a closer relationship. However, Brexit has already cut the UK's GDP by 6-8%, and even Brexit supporters now admit it has hurt growth.The UK could boost trade by rejoining the EU's single market or negotiating a customs union. But both options have political challenges. The Liberal Democrats and some Labour lawmakers support a customs union, but it would limit the UK's ability to make independent trade deals. On the other hand, the anti-EU Reform UK party, led by Nigel Farage, is gaining popularity and would oppose any move seen as reversing Brexit. The UK's current trade agreement with the EU works well for the bloc, so it's not eager for change. The EU will also consider the risk of a future Farage-led government undoing any new deal. Starmer's recent criticism of Brexit seems more like a political strategy to target Reform UK rather than a serious move towards closer EU ties. As a result, the UK's economic growth is likely to remain slow.