UK SMEs have reached a tipping point, with new research from the British Chamber of Commerce showing a sharp spike in the adoption of AI over the past year, though there are still some deep sectoral disparities.

Polling more than 1,500 business leaders of small and medium-sized enterprises (SMEs), the BCC found that over a third (35%) are now actively using AI, up from 25% in 2024. 

The research, featured in the trade body’s latest report Unlocking the Next Level of AI, shows more appetite for tech progress among smaller firms, with 24% saying they plan to adopt AI in the future, while the number with no plans to use AI has fallen from 43% last year to just 33% today.

However, although AI is on the rise, some sectors are lagging. While almost half (46%) of B2B service firms in areas such as finance, law and marketing are using AI, just 26% of B2C firms and 28% manufacturers are embracing the tech. 

Despite embedding AI more deeply than before, many SMEs still do not feel they are using the technology to its full potential. 

Overall, just 11% of firms report using AI to a ‘great extent’ for automating or streamlining operations, while 42% use it to some extent, and 14% not at all. 

This limited uptake aligns with how SMEs are currently applying AI. The BCC survey shows that around 60% are using genAI tools for content creation and knowledge work, but only 30% are fully capitalising on its productivity potential, leaving just 10% that are customising AI to suit their internal systems and operational use.

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While the findings reveal a widening divide between AI-ready firms and those struggling to keep pace, the BCC said that the increase in AI adoption was encouraging news for the UK’s economic future.

“The pace of technological change is speeding up, not slowing down, and it’s crucial that all businesses are part of the digital revolution,” said Shevaun Haviland, director general of the British Chambers of Commerce.

“Our survey shows the picture is not equal across all sectors, and firms aren’t yet using the technology to its full potential. 

“It’s crucial that the Government acts swiftly on the recommendations of the SME Digital Adoption Taskforce. Improving AI awareness, support and skills must be the focus. Getting this right will help firms drive forward economic growth in an increasingly digital world.”