The UK has launched a national Quantum Strategy, aiming to establish leadership in this emerging technology. The strategy targets a $1 trillion market value-add from quantum computing across key industries by 2035. This initiative seeks to convert the UK’s strong research base into commercial success and strategic advantage, addressing gaps in scaling infrastructure and high-risk capital.
Quantum Computing Surpasses Classical Limits in Key Applications
Classical computing approaches are encountering limitations in several fields, hindering progress in areas like artificial intelligence and drug discovery. These bottlenecks stem from hitting physical and computational limits, specifically regarding computing resources and the ability to accurately simulate complex chemistry. Quantum technologies offer a path to bypass these constraints, expanding possibilities beyond what’s achievable with current methods, and avoiding reliance on other nations’ advancements. Beyond simply improving existing technologies, quantum computing promises to surpass the limitations of Moore’s Law – the historical trend of doubling processing power – and enhance critical systems like navigation.
Economic projections suggest significant gains, with quantum adoption potentially delivering a 7% productivity increase across the UK by 2045 and creating 126,100 jobs. This growth, however, is accompanied by a consolidating market, increasing the urgency to establish sovereign capabilities and avoid technological dependence.
$1 Trillion Quantum Market Projected by 2035 Drives Global Competition
By 2035, the quantum computing market is forecast to generate over $1 trillion in value-add across industries like automotive, chemicals, finance, and life sciences. This rapid growth is coupled with a trend towards market consolidation, where investment increasingly concentrates in fewer companies. Projections indicate the quantum sector will expand by 35 percent annually through 2032, fueled by a doubling of funding for quantum startups to $2 billion in 2024. The potential long-term economic impact is substantial, with quantum adoption anticipated to boost UK productivity by 7 percent by 2045 and create 126,100 jobs.
However, the capital-intensive nature of quantum development is already prompting consolidation and fewer new startups. Countries like China, with $15 billion in quantum investment, and Germany are actively pursuing leadership, highlighting the competitive landscape and the risk of technological dependence if the UK does not scale its capabilities.
UK Ranks Third in Quantum Research, Second in Venture Capital
The UK currently holds the third position globally in academic quantum research, demonstrating a strong foundation in the field. Complementing this research strength, the nation attracts the second-highest level of venture capital investment in quantum technologies, trailing only the United States. This financial support began with the 2014 National Quantum Technologies Programme, indicating a decade of strategic governmental foresight in recognizing quantum’s potential. Despite this promising start, the document emphasizes a risk of failing to translate research into scalable commercial ventures.
The UK is home to the second-largest number of quantum startups, yet these companies face challenges securing high-risk capital and early adoption from corporations and the government. This creates a vulnerability, as firms like Oxford Ionics and PsiQuantum are increasingly scaling operations outside of the UK to pursue opportunities elsewhere.
2014 National Quantum Technologies Programme: A Foundational Start
This initiative, implemented over ten years ago, capitalized on the nation’s strong foundation in academic quantum research and began to lay groundwork for future development. While the UK currently ranks third globally in this research area, the program’s foresight was essential to attracting the second-highest amount of venture-capital investment, trailing only the United States. Despite this promising start, the program alone isn’t sufficient for long-term success, as scaling research into commercial ventures requires substantial infrastructure and capital. This situation risks seeing UK-based companies seek scaling opportunities abroad, potentially jeopardizing sovereign capabilities and economic benefits.
Quantum Startup Scaling Hindered by Capital and Infrastructure Gaps
The United Kingdom’s promising quantum startup ecosystem faces significant hurdles in scaling up, primarily due to deficiencies in capital and infrastructure. Despite ranking second globally in venture-capital investment—trailing only the United States—these funds aren’t sufficient to support companies through the demanding development phases required for quantum technologies. This lack of high-risk capital is compounded by a lag in early-stage corporate and government adoption, limiting revenue streams crucial for growth. This situation is already prompting UK-based quantum firms to seek opportunities abroad, as demonstrated by buyouts and expansions into countries like the United States and Germany.
The sector’s resource-intensive nature is accelerating market consolidation, with investment focusing on fewer companies, and fewer startups emerging each year. Without addressing these structural weaknesses, the UK risks forfeiting substantial economic benefits and becoming reliant on foreign quantum capabilities, especially given projections of a 35% annual growth rate through 2032.
Oxford Ionics, PsiQuantum, Universal Quantum Seek Opportunities Abroad
Several UK-based quantum companies are now pursuing opportunities outside of the country due to limitations in domestic infrastructure and capital. Oxford Ionics was acquired by US firm IonQ, signaling a loss of sovereign capability in the sector. Additionally, PsiQuantum is prioritizing scaling operations in the United States, while Universal Quantum established a Hamburg office to secure a significant German government contract. This outward shift reflects a broader trend of consolidation within the quantum market, where companies require substantial investment to scale. The UK, despite ranking highly in quantum research and venture capital investment, lags behind nations like Germany and the Netherlands in early adoption and corporate backing.
Quantum’s Role in National Security: Navigation & Encryption
Quantum technologies are poised to reshape navigation and secure communication, becoming crucial components of national security. Current navigation systems rely heavily on GPS signals, which are vulnerable; quantum advancements offer the potential to create systems less susceptible to disruption and interference. This shift is vital as classical technologies reach their limits in precision and resilience, paving the way for more secure and reliable infrastructure. Beyond navigation, quantum encryption methods promise communication security far exceeding current capabilities. The development of these technologies directly addresses a growing need to protect sensitive data and critical infrastructure from increasingly sophisticated cyber threats.
Establishing sovereign capabilities in these areas is essential, as reliance on foreign technologies could create unacceptable strategic vulnerabilities, particularly given the projected 35% annual growth of the quantum sector through 2032.
UK Quantum Sector Forecasts 35% Annual Growth Until 2032
This rapid growth is occurring within a market already demonstrating signs of consolidation, meaning fewer startups are being founded while investment concentrates in a smaller number of companies. Funding for quantum startups nearly doubled in 2024, reaching $2 billion, signaling increasing investment in the field. However, the resource-intensive nature of quantum development requires addressing structural deficiencies in infrastructure and high-risk capital to ensure the UK can translate research into commercially viable enterprises. Failure to do so risks increasing technological dependence on other nations and forfeiting significant economic benefits.
Sovereign Capability at Risk: Avoiding Technological Dependence
The UK faces a significant risk of technological dependence in quantum technologies due to gaps in scaling research into commercial ventures. While the nation boasts a leading position in academic research and a high number of quantum startups—second globally—it currently lacks the infrastructure and high-risk capital needed for these companies to thrive. A lack of early adoption by UK corporations and government entities further limits revenue streams for domestic quantum companies, hindering their competitiveness. National security concerns tied to quantum advancements in areas like navigation and encryption emphasize the importance of securing sovereign capabilities.
Quantum as Catalyst: Integrating with AI and Broader Tech Strategy
Quantum technology is positioned to resolve limitations in existing technologies, including those hindering artificial intelligence progress. Current computing resources present a bottleneck for AI innovation, and classical simulations struggle with complex problems in fields like drug discovery; quantum approaches offer solutions by expanding computational possibilities. This integration isn’t isolated, but crucial, as quantum should be viewed as a catalyst within a wider tech strategy focused on overall productivity and economic growth.
The quantum sector is predicted to experience substantial annual growth—around 35 percent through 2032—and is projected to add 126,100 jobs by 2045 with a 7 percent productivity gain for the UK. However, the industry is undergoing consolidation with investment concentrating in fewer companies, making strategic government intervention vital to support UK-based startups and secure sovereign capabilities. Successfully scaling quantum requires coordinated efforts across research, finance, infrastructure, and procurement, not as a separate initiative but as a foundational element of broader technological advancement.
