UK businesses falling behind on AI adoption as PwC study reveals investment and returns gap

British businesses are in danger of being left stranded in the middle of the pack on artificial intelligence, with a new PwC study revealing a significant gap between UK firms and the world’s top AI adopters in both spending and returns.

The consultancy’s global survey found that while leading companies worldwide are investing an average of five per cent of revenue in AI and reaping returns of 15 per cent, their British counterparts are committing just two per cent and generating returns of ten per cent. It is a gap that should alarm boardrooms across the country, particularly among small and medium-sized enterprises already grappling with tight margins and limited budgets for technology transformation.

Perhaps more troubling is the innovation shortfall the figures suggest. UK businesses derived only 27 per cent of their revenue from products that did not exist three years ago, compared with 43 per cent among global leaders. For SMEs, which have historically relied on agility and fresh thinking to compete against larger rivals, that disparity ought to prompt some uncomfortable questions about whether enough is being done to turn AI capability into genuinely new commercial offerings.

The research points to familiar obstacles. Outdated IT systems and rigid internal processes continue to hold companies back, with only 27 per cent of UK businesses having redesigned their workflows to properly integrate AI rather than simply grafting it on to what already exists. The same proportion had modernised legacy technology to better accommodate the tools.

There is also a question of ambition. Nearly half of the UK businesses surveyed said efficiency and productivity were their primary motivation for experimenting with AI, while just 26 per cent cited revenue generation. It is a mindset that Leigh Bates, PwC UK’s global risk AI leader, believes is limiting the country’s potential.

Bates described the findings as a wake-up call, arguing that too many firms remain trapped between piloting AI projects and scaling them effectively. The businesses seeing the greatest returns globally, he said, are not merely doing more of the same but fundamentally reinventing how they operate.

Overall, the UK ranked 11th out of 19 countries in PwC’s assessment, behind China at the top of the table, as well as France, Germany and Saudi Arabia. The United States, notably, fared little better at 13th. PwC defined global leaders as companies in the top 20 per cent of AI-driven performance.

For Britain’s SME community, the message is clear enough. The window to move from cautious experimentation to meaningful adoption is narrowing, and those that continue to treat AI as little more than a cost-cutting exercise risk discovering that their competitors, at home and abroad, have already moved on.

Amy Ingham

Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.

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