What the budget commits

The chancellor's budget promises fresh investment for Britain's AI Security Institute and other critical institutions, alongside funding for new capabilities across the country. Healey said the government would commit hundreds of millions of pounds to develop a "distinctively British" approach to AI.

The measures include:

• New investment in AI chip design capability in Edinburgh
• A new AI Centre of Excellence in Manchester
• £10m a year to lead the UK's work on understanding how AI will reshape jobs and industry
• Up to £300m in public-private investment, backed by the Treasury, for a new AI Biosecurity Lab to protect people from emerging biological threats

Security and prosperity case

Healey promised the biggest ever investment to guard against cyber risks and the technology's disruptive potential, and said AI would transform daily life, with every firm, community, hospital, school and every aspect of the economy able to benefit.

Security minister Dan Jarvis backed the plans, saying: "I'm proud the UK has repeatedly been at the forefront of global efforts to use AI for the benefit of humankind". He added that the investment will help strengthen national security while staying one step ahead of those who seek to use AI to do harm.

Risks and worker concerns

The pledge comes amid growing fears over cyber-attacks, IT systems turning rogue and devastating job losses, as companies invest in machines rather than humans. This week, websites around the globe went dark after a serious vulnerability was found in a computer language used to build much of the world wide web - a development made possible by rapid AI advances. Barclays is cutting 5,000 jobs as part of cost-saving plans linked to efficiency gains from rolling out AI across the bank.

Healey addressed those anxieties directly. "I understand and share the concerns of working people, so I am setting out a distinctively British approach to AI", he said, describing an approach that does not leave workers behind and defends the national interest.

The economic backdrop

The budget is being delivered amid a volatile backdrop: the war in the Middle East is sending shock waves through the global economy, pushing up inflation and dragging down business confidence. On Friday the oil price rose above $117 a barrel at one point, its highest level for six months, amid Gulf tensions. Healey vowed to give households and businesses "breathing space" as energy costs hit millions of families this winter.

Against that, official figures show AI investment helped the UK record the strongest growth performance in the G7 in the first half of this year. Healey is delivering his debut budget three months into Andy Burnham's premiership, after Burnham replaced Keir Starmer in the summer.

The wider security context was underlined on Thursday, when defence secretary Wes Streeting warned that UK households should prepare against mounting risks from weather, cyber or other serious emergencies. His Be Ready campaign advises households to stock up on supplies to last 72 hours.

The budget falls on Wednesday, when the pledged AI security investments are due to be set out.