The Government published the second annual Artificial Intelligence Sector Study 2023 today, based on work by a consortium led by Perspective Economics. It is a comprehensive and fascinating evaluation of the annual growth of the AI industry sector in the UK. It reveals a dynamic ecosystem, with many opportunities for 2025. We’ve gathered some of the highlights, but strongly recommend reading the full study.
A Thriving AI Sector
* The UK AI sector is thriving, with over 3,700 AI companies (+17%), employing over 60,000 people and generating more than £10 billion in revenues (+34%).
* The sector contributes £5.8 billion to Gross Value Added (57%).
* Diversified AI companies (businesses that aren’t solely AI focussed) have driven the most growth in the sector, with an 80% increase in revenues, 44% increase in employees (11,000) and 70% increase in GVA since 2022.
* 65% of the companies in the survey were exporting overseas.
Regional Concentration and Growth
AI activity remains concentrated in London, the South East and the East of England, where 75% of companies are located, receiving 70% of the investment in 2023. However, other regions, such as the North West and Scotland, are beginning to see growth particularly in sectors like automotive, transportation and energy.
Sectoral Growth Drivers
Key industries adopting AI include financial services, healthcare, life sciences and manufacturing. Growth drivers for businesses include developing new AI products (74% of companies) and improving existing ones.
International big tech still dominates
Despite accounting for only 9% of AI companies in the UK, international firms account for 47% of AI-related revenues and 33% of AI employment.
A small group of big tech companies still dominates the AI sector: The top 10 AI companies in the UK account for 62% of the sector’s total GVA.
What this means for UK AI Businesses in 2025
More demand as business explore the benefits of AI
AI is increasingly being adopted across diverse industries, with financial services, healthcare and manufacturing showing the highest levels of AI activity. More businesses are starting to invest in AI tools and skills to improve efficiencies and provide a competitive edge.
Tap into region-specific opportunities
As AI activities spread beyond traditional hubs, businesses in regions like the North West and Scotland can leverage local expertise in sectors like energy, transportation and agriculture. AI firms in these regions should focus on scaling up and building partnerships across sectors to tap into growing regional clusters.
The year of continual innovation
Companies should continue to innovate with emerging tools to find solutions to a range of business challenges, particularly with Generative AI. 74% of businesses said that developing AI products was a ‘key future growth driver’.
Barriers persist
Barriers to growth persist including limited access to investment and a lack of AI talent.
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