Chancellor Philip Hammond is expected to give tests on driverless cars the green light in Wednesday’s Budget.
Writing in The Sun, Mr Hammond said investment would “prepare the ground” for the cars to be on the road by 2021.
He wrote: “This was once just an investor’s dream, but it will soon become a reality.
“We can stand by and watch this happen, or we can embrace it and take full advantage of what is in front of us.
Wednesday's Budget:
£75 million for artificial intelligence
£400 million for electric car charge points
£100 million to boost clean car purchases
£160 million for next generation 5G mobile networks
£100 million to pay 8,000 computer science teachers
£76 million to boost digital and construction skills
A new training partnership between the TUC, CBI and the government
“My Budget will include plans to make Britain a world leader in this area – the best place for developers to make and road test prototype vehicles.”
The first public trial of autonomous vehicles was undertaken in Milton Keynes last October, using two-seater “self-driving pods”.
The UK’s biggest car manufacturer, Jaguar Land Rover, recently began testing driverless cars on public roads.
Driverless cars function through the use of electronic sensors which allow them to detect traffic and judge their speed appropriately.
Jaguar’s driverless car tests took place in Coventry city centre over the course of several weeks.
The government estimates the industry would be worth £28 billion to the UK economy by 2035 and will support 27,000 jobs.
The government is expected to announce £400 million to introduce new electric car charge points.
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