Only one in five of the UK’s 5.7 million small businesses are using AI regularly, indicating a widening gap as larger businesses race ahead, new research from Enterprise Nation’s Tech Hub, in partnership with Google, Sage, Dell Technologies and Square, has found.
The report, UK SME Digital and AI Adoption: The state of play in 2026, is based on a nationally representative survey of 1,320 UK micro and small businesses up to 250 employees, entrepreneurs and decision-makers.
It found that while small businesses have broadly adopted everyday digital tools, real AI use remains at an early stage. Unlike AI outliers like Denmark, where adoption in young enterprises sits at 42%, according to the IMF, just 21% of small businesses in the UK use AI regularly, including only 6% that have embedded it into daily work across the business. By contrast, 57% of SMEs now describe themselves as highly or moderately digital.
More than half (53%) think stronger AI capabilities would help to improve the quality, consistency and speed of products or services and 45% that it could make them more resilient to future economic and market changes.
Yet, when asked about what is holding them back from adopting AI, 53% of SMEs cite cost, 46% say lack of skills, 38% concerns about privacy and data and 37% lack of time to learn, set up or integrate new tools.
