New research shows that digital technology could add £520 billion to UK economy by 2030

Accelerated adoption of AI could help the UK to achieve tech superpower status by 2028. However, businesses still struggle to find employees with good digital skills.

The UK Government recognises the transformative potential of artificial intelligence (AI), and set out ambitious plans to make the UK a ‘science and technology superpower’ by 2030.

Amazon Web Services (AWS) commissioned independent consultancy, Strand Partners, to undertake a new study to understand the role that digital technologies, cloud computing and AI can play in unlocking the UK’s digital potential.

The study found that the number of UK companies adopting AI has increased by 31% from 2022 to 2023. Thanks to this acceleration in AI adoption, digital technology could add £520 billion to the UK economy by 2030, and help the UK to meet its ambition to become a tech superpower as early as 2028.

While UK businesses overall have increased their use of AI in 2023, the level of adoption is uneven across nations and regions. Closing these divides presents an opportunity for the UK to boost the economic potential of advanced digital technologies further, for example, in areas with the lowest digital adoption such as Wales and the South West of England.

However, despite this positive outlook, the research showed that many individuals and organisations are still not equipped with the skills to take full advantage of the opportunity presented by digital technologies. The study revealed that only 13% of businesses find it easy to hire staff with good digital skills.

A Breakout Year for AI Adoption

2023 was a breakout year for the uptake of AI technologies in the UK. In 2023, 39% of UK businesses reported adopting AI, up from 30% in 2022, and 70% of businesses which are already using AI said they are using generative AI or large language models (LLMs).

Businesses using AI are already seeing benefits, which are helping them to achieve growth and drive innovation. Nearly 9 in 10 reported enhanced automation and efficiency, 79% have experienced cost savings and 64% saw increased revenue in 2023.

This growth in AI is supported by an increased use of cloud computing; 39% of UK businesses said that cloud computing has become more important over the last year. Cloud computing is foundational for the use of AI, and underpins the LLMs which power generative AI applications.

“These results show just how powerful technology is as a driving force for growth across the UK. Innovations in AI, cloud, quantum and more will no doubt continue to push the boundaries of what is possible for British businesses.”

Saqib Bhatti, Minister for Tech and the Digital Economy

“We believe that every single UK business should have the opportunity to unlock the potential of AI and compete on the world stage. However, to accomplish this, we must ensure that all UK businesses have the right support, tools, and in particular, the right skills to get off the starting blocks and succeed. The digital skills gap is a major barrier for many organisations and citizens: 33% of businesses in this research reported it has hindered growth and 37% that it had increased costs. Affordable and robust training programmes need to be put in place and promoted by both businesses and the government to create a future pipeline of talent to push the UK’s AI innovation forward.”

Phil Le Brun, Director Enterprise Strategy, AWS.

New Opportunities for AI-Powered Growth

While UK businesses overall have increased their use of AI, the level of adoption is uneven across nations and regions. Closing these divides presents an opportunity for the UK to boost the economic potential of advanced digital technologies further.

The study revealed that 75% of all businesses’ AI adoption is concentrated in four regions: London (23%), the South East (21%), the North East (18%), and the North West (13%). If Wales and the South West, the regions with the lowest digital adoption rates, increased adoption to the UK average of 39%, an additional £2.48 billion could be generated for the UK economy per annum – equivalent to more than half the value of the UK’s music exports.

To help support digital growth and innovation across the country, AWS runs workshops to upskill regional businesses in cloud technology through the Digital Innovation Programme for Small & Medium Businesses. The most recent workshop was held in collaboration with Business West in the South West of England, an area which reported 2% AI adoption in 2023 in this study.

UK businesses’ adoption of AI is also uneven across industry sectors. Over two-thirds of AI adoption is concentrated in just five sectors: technology, telecoms, financial services, professional services and construction. If the four sectors with the lowest digital adoption (agriculture, hospitality, healthcare and retail) boosted their AI adoption to the UK average (39%), estimates show that this could generate £8.21 billion for the UK economy – equivalent to half of the contribution of the sports sector to the UK economy.

Unlocking the AI Opportunity for the UK’s Smallest Businesses

The research shows that the level of investment in digital technology by large businesses has outstripped that of smaller businesses. Large businesses (those with more than 250 employees) have adopted AI at four-times the rate of micro businesses (those with fewer than 10 employees), at 60% compared to 15%. This is despite at least one in four (26%) micro businesses reporting that they could name a potential practical use case for AI in their organisation.

If the UK could boost the uptake of AI among micro businesses to match that of large businesses, an additional £13.98 billion could be unlocked per annum for the UK – the equivalent of double the value of the UK video games market.

AWS and Amazon show how it is possible for larger businesses to support start-ups to grow and scale with digital technologies. For example, the AWS Emerging Technologies Accelerator is a programme that supports early stage start-ups in the UK operating in emerging technologies such as blockchain, web3, Internet of Things (IoT) and AI/machine learning (ML).

Overcoming the UK’s Digital Skills Gap

Despite the UK becoming more digitally advanced, and businesses and consumers looking to increase their adoption of AI technologies, digital skills capabilities are not keeping pace. According to the UK Government, the digital skills gap costs the UK economy £63 billion a year in lost potential GDP – a number which is expected to grow.

This research revealed that businesses are struggling to hire people with good digital skills. On average, businesses estimated that it takes 7.5 months from posting a job vacancy to finding an employee with the appropriate digital skills.

Furthermore, according to this research, nearly half of UK businesses (48%) said the digital skills most lacking in their business were basic digital skills such as creating a spreadsheet or backing up data, and just 20% said they found it easy to train staff in digital skills. Over a fifth of businesses which have adopted cloud (21%) said that cloud skills are lacking in their organisations.

This digital skills gap is holding UK businesses back: almost one third (32%) reported that the gap has hindered growth, and 37% said that it has increased business costs.

Businesses are taking proactive steps to address the digital skills gap. 76% of businesses stated that they currently invest in some form of digital skills training for their employees. Encouragingly, UK citizens want to improve their digital skills. Three quarters (76%) of UK citizens reported they are interested in learning new digital skills, while the same number believe it is important to continuously improve their digital skills. Job progression is a motivator for digital upskilling, with 36% citing improved career prospects as a key motivator, and 32% wanting to stay competitive in the job market.

Since 2017, AWS has trained more than 700,000 people in the UK on cloud skills. Programmes AWS has launched that are available in the UK include AWS Educate, which offers hundreds of hours of self-paced training and resources for new-to-cloud learners; AWS Academy, which provides higher education institutions with a free, ready-to-teach cloud computing curriculum that prepares students to pursue industry-recognised certifications and in-demand cloud jobs; and AWS re/Start, a cohort-based workforce development training programme that prepares individuals for careers in the cloud and connects them to potential employers.

A Path to Tech Superpower Status by 2028

According to this study, digital technology is set to become a powerhouse for the UK’s economic growth in this decade. If the UK is able to maintain its growth in AI adoption, it could meet its ambition of becoming a tech superpower as early as 2028. However, in order to achieve this, the UK must tackle barriers such as the digital skills gap, and help all businesses in all industries and all regions to level up and make the most of the AI opportunity. This will empower the UK to realise significant benefits, including an additional £520 billion in Gross Added Value (GVA) to the UK economy by 2030.