British businesses risk falling behind global competitors in the race to harness artificial intelligence, according to a new PwC study that highlights a widening gap in both investment levels and financial returns.
The consultancy’s global survey shows that leading international companies are now allocating around five per cent of their revenue to AI-related technologies and achieving average returns of 15 per cent. In contrast, UK firms are investing just two per cent and seeing returns closer to ten per cent, underscoring a growing divide in performance.
The findings raise particular concerns for small and medium-sized enterprises, which often depend on innovation to stay competitive. The report indicates that UK businesses generated only 27 per cent of their revenue from products developed in the past three years, compared with 43 per cent among global AI leaders.
Analysts say this shortfall points to a broader weakness in innovation capacity, especially at a time when rapid technological change is reshaping industries. For SMEs operating under financial pressure, the data suggests that limited investment in AI could restrict long-term growth opportunities.
PwC’s research also highlights structural barriers slowing adoption. Only 27 per cent of UK companies have redesigned their workflows to fully integrate AI systems, while a similar proportion have modernised older technology infrastructure. Many firms, the report notes, continue to apply AI tools on top of existing systems rather than embedding them into core operations.
The study also identifies a difference in strategic priorities. Nearly half of UK businesses surveyed said they are focusing on efficiency and productivity gains when experimenting with AI, while just 26 per cent view revenue generation as a key objective. According to PwC UK’s global risk AI leader Leigh Bates, this reflects a cautious approach that may be limiting potential gains.
Bates said the findings should serve as a warning to business leaders, adding that many organisations are stuck in the experimental phase and struggling to scale successful pilots into wider transformation. He noted that the strongest performers globally are those using AI to fundamentally reshape how they operate, rather than simply improve existing processes.
Overall, the UK ranked 11th out of 19 countries assessed in the report, trailing China, France, Germany and Saudi Arabia. The United States also lagged behind, placing 13th. PwC classified “global leaders” as firms in the top 20 per cent of AI-driven performance.
The report concludes that the opportunity for UK businesses is narrowing. Companies that continue to view AI primarily as a cost-saving tool, rather than a driver of new revenue and innovation, risk being overtaken by faster-moving competitors in both domestic and international markets.