How UK Industry is Embracing AI in 2023

Artificial intelligence (AI) is transforming the way businesses operate, compete and innovate across various sectors and industries. In this blog post, we will look at some of the current and future trends of AI adoption and usage in the UK, as well as the challenges and opportunities that lie ahead

AI Adoption Rate and Expenditure

According to a recent report by Capital Economics commissioned by the Department for Digital, Culture, Media & Sport (DCMS), around 15% of all UK businesses have adopted at least one AI technology, which translates to 432,000 companies². Around 2% of businesses are currently piloting AI and 10% plan to adopt at least one AI technology in the future, equating to 62,000 and 292,000 businesses respectively².

As businesses grow, they are more likely to adopt AI; 68% of large companies, 34% of medium sized companies and 15% of small companies have adopted at least one AI technology; the latter make up the majority of the UK business landscape and hence drive the UK average result of a 15% adoption rate².

AI solutions for data management and analysis are most prevalent, with 9% of UK firms having adopted them, followed by natural language processing and generation (8%), machine learning (7%), AI hardware (5%), computer vision and image processing and generation (5%)².

The IT and telecommunications (29.5%) and legal (29.2%) sectors currently have the highest rate of adoption, while the sectors with the lowest adoption rates are hospitality (11.9%), health (11.5%), and retail (11.5%)².

The report estimates that UK businesses spent £4.1 billion on AI technologies in 2020, which is expected to rise to £6.6 billion in 2023². The largest share of spending goes to data management and analysis (£1.9 billion in 2020), followed by natural language processing and generation (£1 billion), machine learning (£0.8 billion), computer vision and image processing/generation (£0.3 billion) and AI hardware (£0.1 billion)².

AI Benefits and Challenges

AI can bring various benefits to UK businesses, such as improving efficiency, productivity, quality, innovation, customer satisfaction and competitiveness. For example, AI can help retailers personalise their offerings, optimise their supply chains, reduce costs and increase sales⁵. AI can also help legal firms automate document review, contract analysis, due diligence and compliance⁴.

However, AI also poses some challenges and risks that need to be addressed, such as ethical, social, legal and regulatory implications. For instance, AI can potentially generate false or misleading information, increase fraud or cyberattacks, disrupt labour markets or infringe on privacy or human rights¹.

The UK government has recognised the importance of fostering a safe and trustworthy AI ecosystem that can maximise the benefits while minimising the harms of AI. It has invested heavily in AI research and innovation, such as through the Alan Turing Institute³, the UK's national institute for data science and artificial intelligence. It has also established various initiatives and frameworks to support ethical and responsible AI development and use, such as the Centre for Data Ethics and Innovation¹, the AI Council¹ and the Data Protection Act 2018¹.

AI Future Outlook

The UK has a strong position in the global AI landscape, with a vibrant ecosystem of research institutions, start-ups, scaleups and established firms that are leading the way in developing and deploying cutting-edge AI solutions⁴. The UK also has a supportive public sector environment that is committed to fostering innovation and growth while ensuring safety and accountability¹.

However, the UK also faces some challenges and uncertainties in its AI journey, such as skills shortages, data availability and quality issues, infrastructure gaps, market fragmentation or global competition². The UK will need to continue to invest in its AI capabilities and infrastructure, foster collaboration across sectors and stakeholders, address ethical and regulatory challenges and promote public awareness and trust in AI².

AI is a transformative technology that can bring significant opportunities and challenges for UK industry in 2023 and beyond. The UK has a strong potential to become a global leader in AI innovation and adoption if it can leverage its strengths while overcoming its weaknesses.

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(1) AI activity in UK businesses: Executive Summary - GOV.UK. https://www.gov.uk/government/publications/ai-activity-in-uk-businesses/ai-activity-in-uk-businesses-executive-summary.

(2) Artifical Intelligence: areas of use in UK retail 2019 | Statista. https://www.statista.com/statistics/1026052/artificial-intelligence-retailers-area-of-use-in-the-united-kingdom-uk/.

(3) Five Of The Leading British AI Companies Revealed - Forbes. https://www.forbes.com/sites/davidprosser/2020/07/10/five-of-the-leading-british-ai-companies-revealed/.

(4) UK and US intervene amid AI industry’s rapid advances. https://www.theguardian.com/technology/2023/may/04/uk-and-us-intervene-amid-ai-industrys-rapid-advances.

(5) Alan Turing Institute. https://ai-uk.turing.ac.uk/.

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