EU AI Act: Will The New Artificial Intelligence Act in EU Impact UK Businesses?

The European Artificial Intelligence Act (EU AI Act) was enacted on 1 August 2024. It marks the first piece of EU regulation of AI and aims to foster ethical use of the technology. Read on as we examine the legislation’s contents and how it may impact the UK before exploring Labour’s plan for AI.

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What is the EU’s Artificial Intelligence Act?

The EU AI Act, introduced at the beginning of August, establishes a risk-based framework for using the technology. The AI laws obligate transparent and safe usage by placing AI systems into different risk categories:

  • Minimal Risk – For systems like spam filters, the associated risks aren’t deemed to be of concern. As a result, although companies can adopt voluntary codes of conduct, they aren’t obligated to do so.
  • Limited Risk – Should the potential risks of a system be considered low impact, companies will be required to follow transparency requirements. This will be the case for the likes of chatbots.
  • High Risk – If a system is in an area considered critical, like education, employment, or the law, strict requirements will be enforced, and rigorous assessments will become obligatory. Such requirements would include human oversight, disclosure of AI usage and risk-mitigation measures. This ensures the technology doesn’t produce biased results disproportionately affecting marginalised groups.
  • Unacceptable Risk – Any system placed in this category will be banned. Examples include systems that manipulate human behaviour, produce social scores and profile potential criminals.

With the European Union AI rules now in force, a timeline of regulation has begun. From February 2025, systems deemed to be of an unacceptable risk will become prohibited. Several months later, in August, various requirements will be imposed on the providers of generative AI tools. A year after that, rules concerning high-risk systems will come into effect.

EU AI Act – Its Impact on UK Businesses

As the EU aims to become the “global hub for trustworthy AI”, its AI laws intend to promote ethical, non-discriminatory usage, trust and innovation in the sector. Despite this, there has been concern about the impacts of the EU AI Act.

While the measures to mitigate potentially harmful AI use have been applauded, numerous challenges have also been raised. One such worry is that the costs associated with the new technology’s development and implementation will rise as companies look to remain compliant. Due to the rising costs, there’s particular concern that smaller companies will struggle to keep up because of their lack of resources.

As a knock-on effect, it’s also been suggested that this need to adhere to strict regulations will hamper future development. By slowing innovation down, there’s fear the EU could fall behind its global competitors.

But there’s more. With some labelling the EU regulation of AI as rushed, it’s been highlighted that areas of the new law are incomplete. As a result, questions remain over issues like copyright. For example, would it be illegal if a generative AI system acquires knowledge from copyrighted material?

Despite the UK no longer being a part of the EU, business here could also be affected. That’s because should a UK business look to operate in the EU market, it must comply with the new EU AI Act. Therefore, UK businesses looking to trade there would be required to:

  • Ensure their systems comply with the European Union AI rules
  • Disclose any AI usage that would affect EU citizens or markets
  • Conduct risk assessments and audits for compliance
  • Train staff on AI ethics, aligning their strategies with the regulations

Labour’s New AI Regulations: What You Need to Know from the King’s Speech

On 17 July 2024, the King’s speech confirmed Labour’s proposals to regulate the rapidly growing AI sector. Although the specifics weren’t clear, previous statements from Labour suggest they will adopt a more stringent approach compared to the Conservatives, who planned for flexible governance.

Subsequently, the new Government has stated that it will hold the developers of the most powerful AI models accountable. To do so, it has proposed imposing binding regulations on such companies, requiring them to share testing data, notify the government about specific AI developments, and undertake safety tests under independent supervision.

However, while Labour looks set to introduce a statutory code, the King’s speech didn’t mention an AI Bill. This contrasts with the European Union’s approach to its new EU AI Act.

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