Lord Mayor warns UK must avoid becoming an “incubator economy”

The Lord Mayor of London, Alastair King, has warned that the UK risks becoming an “incubator economy” unless it strengthens global competitiveness and ensures high-growth firms can scale and remain in the country.

Speaking at the Innovation and Technology Dinner at Mansion House on 3rd September, King told an audience of political leaders and industry figures that urgent action is needed to stop British start-ups relocating abroad in search of capital.

The Lord Mayor was joined by the Rt Hon Peter Kyle MP, Secretary of State for Science, Innovation and Technology, and Dame Anne Glover DBE, Chief Executive and Co-Founder of Amadeus Capital Partners, in a discussion that underlined the UK’s challenge to retain its status as a global innovation hub.

King stressed the importance of mobilising long-term investment and adopting emerging technologies. He pointed to initiatives led by the City of London Corporation, including the Scale Up Showcases and the Mansion House Accord, as key efforts to connect high-growth firms with investors and unlock economic value.

Backing the UK’s AI leadership

“UK tech firms raised more than £20 billion in 2024 alone,” King said. “Today, the UK is home to more than 160 unicorns. Our AI sector is the third largest in the world, behind only the US and China, and the largest in Europe.

“In this global technological arms race, we need to put our financial firepower behind that technology. This is precisely what we have been doing through the Scale Up Showcases held here at Mansion House.”

Mobilising long-term investment

King also emphasised the need for British pension funds to commit more capital to technology growth, warning that too many companies risk leaving the UK once they begin to scale.

“Otherwise, we are in danger of becoming an incubator economy, a place where start-ups develop transformative products and services before selling up or moving abroad to where the investment is. Other countries will end up reaping the fruits of our success.

“We need those firms which start here to stay here and to scale here.”

The warning comes as organisations such as the British Business Bank stress the importance of giving firms the financial backing to expand in the UK, and as the Tech Nation Report continues to show the scale of competition from the US and Asia.

Staying competitive

The Lord Mayor also pointed to the need for the UK to resist being sidelined by bigger powers in the global tech race.

“Secretary of State – as you have made clear in your support for the United Kingdom’s AI sector – we cannot simply leave it to the United States and China and become consumers of other people’s innovation. Nor should innovation born in this country be forced overseas.

“It is vital for our prosperity, our security and our very viability for the United Kingdom – as Europe’s leading tech power – to stay at the forefront. That means financing our tech start-up companies, investing in our workforce, and bringing down every barrier to innovation – so that technology can unleash growth across the United Kingdom for decades to come.”

For readers looking at the broader policy landscape, Nesta provides resources on how innovation can be supported to create long-term economic impact.

For more stories on the City of London’s business, finance, and technology landscape, follow EyeOnLondon City for independent reporting that keeps you informed.

[Image Credit | Westend61 GmbH]

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