UK AI Sector Surges to £4.4 Billion But Adoption's Patchy Among SMEs
The government’s 2024 AI Sector Study that was recently released reveals a booming industry but also a growing divide between AI creators and UK companies trying to adopt it.
In 2025, it’s clear the AI sector is accelerating quickly but most UK businesses are still playing catch-up. According to the UK government’s latest Artificial Intelligence Sector Study 2024, AI companies generated £4.4 billion in revenue in 2023, which is a 120% jump from £2 billion in 2021. Investment bounced back, talent numbers rose and the number of AI-dedicated firms hit 4,500.
But while the industry itself booms, adoption across UK businesses remains inconsistent, slow and in many cases, completely stalled. The data exposes a growing gap between the companies building AI and the businesses trying to use it.
AI Sector: £2.9 Billion in Investment But Only for Some
In 2023, UK AI companies raised £2.9 billion in external funding, with the median investment per company increasing fourfold to £2 million. That recovery, after a dip in 2022, shows investor confidence is strong.
But that capital isn’t evenly distributed. The report highlights the same issue many SMEs are feeling on the ground. Funding is flowing into high-growth AI firms and not the companies who need to implement it.
Many UK businesses say they’re stuck at the start line - not for lack of interest but due to confusion, limited access to skills or uncertainty around cost and ROI.
SMEs Want to Adopt AI But Face Real Barriers
The study lists the top three reasons businesses are holding back from implementing AI:
1. Lack of in-house knowledge or expertise
2. Not enough skilled people to drive implementation
3. Concerns about cost, ROI and wasted time
The truth is, most SMEs don’t have a full-time CTO or AI strategist on hand. They’re running lean teams and need clear, commercially viable routes into AI - without the risk of wasting budget.
“This isn’t about convincing businesses that AI matters,” says Christian Collison, Co-Founder of AI Expert. “They know it does. The problem is no one’s showing them what to do, how to do it or what it will actually deliver for their business.”
London Still Leads But Innovation Is Spreading
Half of all dedicated AI companies are still headquartered in London but innovation is branching out. Manchester, Bristol, Edinburgh and Cambridge are seeing growing clusters of AI-related businesses, particularly in life sciences, advanced manufacturing and finance.
The challenge now? Making sure every region and industry gets access to practical AI help - not just the capital and the tech elite.
The Bottom Line: AI Is Working for AI Firms But Not for Everyone Else
While AI companies doubled their revenue and increased their headcount to 50,000 employees nationwide, the businesses expected to adopt that tech are still looking for answers.
The report shows the demand is there. What’s missing is a clear, trusted roadmap. Businesses need an AI Workshop, action plans and AI Implementation support.
That’s where consultancies like AI Expert are stepping in and helping SMEs unlock real value from AI, starting with fast, focused diagnostics like our free AI Readiness Assessment.
