HM Treasury has published the initial prospectus for the AI Economics Institute, a joint research organisation with the Department for Science, Innovation and Technology, setting out its first research agenda on AI’s economic effects. The institute will focus on two core functions: building the evidence base on how AI affects productivity, labour markets, firms, trade and competitiveness, and developing models and scenarios that link AI development and adoption paths to economy-wide outcomes to support policy decisions under uncertainty. On the evidence side, the prospectus prioritises data strategy and governance, access to and linking of public and private data, monitoring infrastructure, improved measurement, and empirical research on adoption, productivity, worker outcomes, income distribution, market structure and trade. On modelling, it targets frameworks and policy-relevant scenarios for output, productivity, labour markets, prices and public finances, with testing of key assumptions such as adoption speed, substitution elasticities, labour reallocation and demand responses. The institute will work with partners across government, academia, business and civil society and may publish selected analysis externally, but the prospectus states that it is not a policy-setting body and that policy decisions remain with government departments. The document is presented as an initial research outlook and is intended to evolve as AI capabilities change, evidence accumulates and new policy questions emerge.

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