January 17, 2022
The Department for Digital, Culture, Media and Sport commissioned Capital Economics to model and report on the current and future use of artificial intelligence by UK businesses. The study is based on a combination of existing literature and survey evidence, official statistics, discussions with experts at DCMS and an original survey of businesses.
The five key findings are:
- current usage of AI technologies is limited to a minority of businesses, however it is more prevalent in certain sectors and larger businesses: around 15% of businesses have adopted at least one AI technology and around 2% are currently piloting AI, with 10% planning to adopt at least one AI technology in the future; AI solutions for data management and analysis are most prevalent, followed by natural language processing and generation, machine learning, AI hardware, computer vision and image processing and generation; the IT, telecommunications and legal sectors currently have the highest rate of adoption;
- different routes are used by businesses to source AI technologies: approximately 40% of businesses that have adopted AI primarily develop it in-house, 40% purchase “off-the-shelf” solutions, and 20% out-source its development; medium-sized firms are the most likely to develop AI solutions in-house;
- the scope for increased adoption is large if conditions are right: in the study’s main scenario, the adoption rate increases from 15.1% in 2020 to 22.7% in 2025; by 2040, the overall adoption rate will reach 34.8%;
- future spending on AI technologies is set to increase, but has a wide range of possible trajectories: in 2020, expenditure on AI by businesses that have already adopted AI was £16.7 billion; such expenditure could increase to between £27.2 billion and £35.6 billion by 2025, at annual growth rates of roughly 10% and 16% respectively; and
- spending on labour related to AI will increase to support AI technologies’ rising prevalence: in 2020, businesses that have already adopted AI, spent a total of £46.0 billion on labour associated with the development, operation or maintenance of AI technologies; this could increase to between £80.2 billion and £103.2 billion by 2025, at annual growth rates of roughly 11.7% and 17.5% respectively.
To read the research in full, click here.