A new survey shows that nearly two-thirds (63%) of Scottish companies believe AI will significantly reshape their sector within the next five years. Despite that, only two-in-five (40%) have formal policies in place to control how AI is used.

Most Scottish business leaders (56%) believe AI will improve efficiency and reduce costs in their business, but two-in-five (43%) agree it will lead to job losses in their sector. More than half see AI creating new opportunities for growth in their own business (54%) and a similar proportion (55%) believe their business is prepared to adapt to those changes.

The eleventh edition of the Understanding Business survey, designed and conducted by Diffley Partnership and Charlotte Street Partners, asked more than 500 senior decision-makers at Scottish firms about the prospects for their own organisation and the wider economy.

Its findings reveal that AI is most commonly deployed by companies to analyse data, with three-in-five firms (61%) using it for this purpose – whether that be some, most or all of the time. The other most popular uses are producing marketing content (58%), advertising content (54%) and writing new business proposals (53%).

Around half (47%) of respondents use AI to produce at least some of their internal communications and, of those who use AI for that purpose, one-in-10 report that communications to employees are generated entirely by AI.

David Gaffney, senior partner at Charlotte Street Partners, said: “It’s striking that while a majority of executives agree AI will transform their sector in the near-term, most firms don’t yet have policies in place to inform how the technology is used in their own workplace.

“This reflects the broad range of experiences we hear anecdotally from people leading businesses of various shapes and sizes across multiple sectors. Some are ahead of the pack, adopting – and adapting – quickly and accepting they’ll make mistakes as they find their way.

“Others are moving much more cautiously, which means progress is slower but feels safer. And a sizeable constituency are caught like rabbits in the headlights, uncertain which way to turn.

“Most surprising to me is that half of all firms are using AI to help them communicate with their own workforce and that one-in-10 of those companies admit that internal comms are generated entirely by AI.

“I’m curious to know if the employees receiving those messages notice any lack of a human touch – and whether it represents a change for the better or worse on previous missives.”

The latest survey covered the topic of business continuity too, revealing that one-in-five (18%) companies have no business resilience plans in place to inform their response to the most common operational risks. The most common business continuity plans are reported to be those covering cybersecurity, with more than half of firms owning one and 85% of those saying the plan is well known among staff.

This wave of the survey asked business leaders where they get their news, with four-in-10 looking to social media for Scotland-specific business news each day, outstripping all other information channels. Around half (46%) say they would be willing to pay for high-quality journalism focused on Scottish business, but less than one-third (29%) currently subscribe to paid-for news sources.

When looking at the perspective of business leaders on the state of the economy, this wave finds an increase in pessimism with regards to general economic conditions. More than half (51%) of businesses that express an opinion now believe the economy is worse than it was a year ago, up six percentage points from September. Similarly, nearly half (45%) believe that the economy will be worse in a year, also up six percentage points from September.

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Perceptions of government support have also weakened slightly. While more respondents continue to see the Scottish Government as concerned with the needs of Scottish businesses (51% agree) compared to the UK Government (35% agree), this wave saw a deterioration in both, with agreement falling by three percentage points for the Scottish Government and four percentage points for the UK Government.

When it comes to the proportion of businesses agreeing that each government is taking action to address business concerns, four-in-10 (40%) agree that the Scottish Government is taking such action, compared to just over a quarter (28%) who say the same about the UK Government. However, significant drops were seen in the proportion agreeing that each government is taking action, with a decline of six percentage points for the Scottish Government and seven percentage points for the UK Government on this measure since September.

Scott Edgar, Senior Research Manager at Diffley Partnership said: “This wave of the survey paints a picture of growing uncertainty for Scottish businesses following the recent budget. Confidence in the economy has weakened and perceptions of government support have slipped, with fewer leaders believing either the Scottish or UK Government are taking action to address business concerns.

“Against that uncertainty, firms see AI as a major source of opportunity and change, even though many are only beginning to put policies and plans in place to manage its impact and harness its potential.”