UK AI regulation in 2025 — why a ‘light touch’ is likely

As the UK enters a pivotal phase in its AI journey, questions around the future of regulation are intensifying. With a Labour government now in power — historically a party inclined towards increased oversight — many anticipated a shift towards statutory control of artificial intelligence (AI). Yet, early signs suggest that a heavy-handed regulatory approach may not materialise — at least not imminently.

Here, Morgan Lewis explores the UK's evolving stance on AI regulation, spotlighting a proposed bill for a central AI authority and the Government’s current strategic plan to take advantage of AI for economic revival.

Parliament considering formal AI oversight

The current legislative landscape is shaped by the reintroduction of the Artificial Intelligence (Regulation) Bill [HL], a private members’ bill originating in the House of Lords and sponsored by Lord Holmes of Richmond. While the Bill proposes the creation of a central AI authority and codified regulatory principles, it lacks government backing and — as tradition holds — such bills rarely become law without cross-party support or executive endorsement.

The Government's strategic approach to AI

A cautious stance on AI may reflect broader strategic priorities. The Government’s AI Opportunities Action Plan, published in January 2025, outlines a vision for AI as a driver of economic growth, public service transformation and global competitiveness. The plan emphasises collaboration with leading AI firms and international partners — notably the UK-US ‘Tech Prosperity Deal’, which has already catalysed significant investment from American companies like Microsoft, NVIDIA, Google and OpenAI.

Given the UK’s stagnating economic outlook, AI is increasingly viewed as a lever for revitalisation. Regulatory restraint may be a deliberate tactic to preserve the UK’s attractiveness to global investors — especially in contrast to the EU’s AI Act, which introduced a comprehensive risk-based framework with stringent compliance obligations and extraterritorial reach.

While Labour’s historical ethos leans towards regulation, the current Government appears to be balancing that tradition against the practical imperatives of innovation and growth. The UK’s sector-led, principles-based approach — still dominant in official policy — may continue to prevail, at least until economic conditions stabilise or international pressures demand harmonisation.

The plan is innovation over early regulation

In short, although the regulatory debate is far from settled, the UK seems poised to maintain a relatively light touch regime in the near term. This could offer a competitive edge over jurisdictions like the EU, which has opted for early and expansive legislative intervention. Whether this gamble pays off remains to be seen — but for now, the UK’s AI sector may continue to benefit from regulatory breathing room.

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Whether you're deploying AI internally, supplying AI solutions or selling into the EU, now is the time to assess your exposure and opportunities. 

Our AI experts help businesses to:

• Understand regulatory guidance relevant to your industry and AI use cases.
• Assess whether your AI adoption brings you within scope of the EU AI Act, including obligations for high-risk systems and cross-border compliance.
• Explore commercial opportunities arising from the UK’s current light touch regime, including how suppliers can leverage regulatory flexibility to scale and innovate.

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