New data reveals the UK’s artificial intelligence sector is booming, experiencing growth 150 times faster than the broader economy since 2022. The sector now boasts revenues of £23.9 billion, supported by over 5,800 AI companies – a 58% increase year-on-year. SMEs are key drivers of this expansion, leading to a 33% increase in the AI workforce, now totaling over 86,000. In 2024, a record £2.9 billion flowed into UK AI companies, solidifying the UK’s position as a leading destination for AI investment.
While London and the South East continue to dominate, AI growth is spreading to regions like the West Midlands, North West, and Yorkshire and the Humber. Critical challenges remain, however. A significant skills shortage threatens future growth, as does a lack of late-stage funding to enable startups to scale and compete globally. The sector also faces calls for clearer regulatory frameworks, with some advocating for standards similar to the EU AI Act, to promote trust and responsible AI development.
Despite these challenges, the outlook is overwhelmingly positive. 58% of UK AI firms anticipate substantial revenue growth in the next year. Realizing the sector’s full potential hinges on addressing these skills and funding gaps while establishing robust regulatory guidelines.