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On 23 October 2024, the UK's Department for Science, Innovation & Technology (DSIT) published its Artificial Intelligence Sector Study which aims to better understand the size, scale, profile and economics of AI activity in the UK.
The report covers the profiling of the UK AI sector, the location of, investment into and economic contribution of AI companies in the UK. This includes market dynamics including market presence, international influence, M&A and employment, across both dedicated and diversified AI companies. It is based on data and research analysis from 2023 including survey input from almost 300 AI companies and some 45 interviews with businesses and stakeholders.
Some of the key takeaways include:
- Increase - Total AI related companies (+17%), employment (+29%), revenues (+34%) and Gross Value Added (+57%) have all increased (compared to DSIT’s 2022 study).
- Location concentration - AI companies remain concentrated in London, the South East and East with around 75% of all AI company offices located there.
- Sector focus - Almost half of all AI companies operate in the Information Technology and Financial Services sectors.
- Regional focus - AI activity amongst the regions differs by sector. At the higher end, over 75% of all AI activity in Financial Services, Research & Development, Marketing & Advertising and Entertainment & Media occurs in London, the South East and East. However, this activity falls below 60% in the Manufacturing, Energy & Utilities and Automative & Transportation sectors showing more activity in other regions.
- International - Around 9% of AI companies are headquartered internationally. The US accounts for over half of this figure.
- US firms also account for over 75% of UK AI-related employment, revenue and Gross Value Added.
- UK investors contribute the most funding to UK AI companies but for the top 20 fundraisings, international investors (including Microsoft, Nvidia and Softbank) account for 60% of the value.
Capturing the UK's AI sector is not straight forward - “Artificial Intelligence activity in the UK is not defined by a formal Standard Industrial Classification (SIC) code. This study therefore uses experimental methods to identify and quantify AI activity across traditional economic sectors. The approach and methodology are consistent with those employed to deliver analyses of the UK cyber security sector annually since 2018, and with the method used to create baseline evidence regarding the AI sector in 2022.”
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This article was written by Ryan Jenkins.
"This AI sector study was first commissioned in 2022 to provide a better understanding of the UK’s AI Sector as it rapidly developed. As large language models became part of everyday life, we commissioned it again in 2023, so that we could assess the rapid changes that have occurred. We now know that there are more than 3,000 AI companies in the UK, generating more than £10 billion in revenues, employing more than 60,000 people in AI related roles, and contributing £5.8 billion in Gross Value Added (GVA). Through subsequent iterations of this analysis, we will continue to monitor developments in the sector, ensuring that our decision-making is grounded in a thorough understanding of the challenges and opportunities facing AI companies in the UK."
