AI is spreading through the UK economy, but not quickly enough. Recent UK evidence shows that around one in three firms with fewer than 50 employees adopted AI, compared with almost two in three larger businesses, while regional adoption ranged from 32% in the North East to 67% in London. Similar patterns are also visible across sectors and other digital technologies.
These gaps show that new inventions are only part of the story. The bigger challenge is helping more firms, in more places, use the tools that already exist.
Technology raises productivity when firms can put it to work
Technology adoption has real potential to boost productivity – helping firms improve production processes, reduce costs, raise product and service quality, reach new markets, and make better use of data.
Recent results from the OECD D4SME survey show what this looks like in practice. Among surveyed SMEs, 42% identified process automation as one main benefit of digital adoption, while 33% pointed to access to new markets, 30% to better monitoring of business activities and 26% to increased sales.
But these gains do not happen on their own. Firms need to choose the right tools, change how they work, train staff and build technology into daily routines. That is where tailored support becomes essential.
The UK case: strong innovation, uneven diffusion
In the UK, a productivity boost is sorely needed. According to a recent UK study, if productivity had grown at its pre-2008 trend, output per worker would have been around GBP 5 000 higher per year on average by 2024.
The OECD’s recent report shows that the UK has strong foundations. It is a global leader in research and innovation and many firms already use mature digital technologies. But this strength does not reach all firms equally.
Further productivity gains will depend in part on success in boosting the uptake of advanced technologies, such as robotics and automation among smaller firms, and lagging sectors and places.
Support must meet SMEs where they are
To succeed, policy support needs to do more than lower the cost of technology. Many firms need help to understand which tools are right for them, how to use them, and how to train staff along the way.
This support also needs to fit local conditions. A small manufacturer in a region with strong technical colleges, good broadband and active business networks will face a different path from a firm in a place where these links are weaker.
Nor do all firms start from the same point. Some need help with basic digital tools. Others are ready to explore more advanced technologies, such as automation, data analytics or robotics.
Lessons from the UK and international experience
The report’s findings point to the value of support that is integrated, locally delivered and adapted to firms’ different stages of digital maturity.
The UK’s Made Smarter programme shows what integrated support can look like. Focused on manufacturing SMEs, it combines diagnostic advice, leadership training and matched funding to support manufacturing firms throughout the technology adoption process.
The United States’ Manufacturing Extension Partnership (MEP) is a good example of combining a strong national policy framework with local programme delivery. The programme operates as a nationwide network providing hands-on support to manufacturing SMEs, ensuring broad visibility and access across regions while adapting support to local business needs.
Finally, Singapore’s SMEs Go Digital programme shows how support can be tailored to firms at different stages of digital maturity. The programme combines instruments ranging from foundational digital solutions for firms at early stages of digitalisation to support for productivity-enhancing tools, e-commerce and more advanced digital solutions.
But good ideas can still fall short. The UK experience shows why delivery matters.
The UK voucher scheme Help to Grow: Digital aimed to encourage SMEs to adopt approved digital technologies, but take-up was low. This suggests that financial incentives alone may not be enough, especially if the selection of tools to invest in is restricted.
Firms also need to know the support exists, find it easy to use and see why it matters for their business. These results also echo those of the D4SME Survey conducted in 10 OECD countries.
These examples suggest that policy design matters, but so does how policies are delivered on the ground. For SMEs, the challenge is often not the lack of support, but the difficulty of navigating a fragmented landscape.
Small firms are not short of ambition. But they are often short of time, confidence and clear routes to support. The UK already has many of the ingredients needed to help SMEs adopt technology more effectively.
What is needed now is stronger awareness and simpler path through the system: national visibility, local delivery and practical support that meets firms where they are. Because productivity gains will not come from technology alone, but from helping more small businesses use it well.
To learn more about the OECD’s work on related topics, see SME Technology Adoption in the United Kingdom | OECD.
Juan Ramón Larraín Aylwin is an Economist/Policy Analyst at the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE), where his work focuses on SME policy, digitalisation and the green transition. Before joining the OECD, he worked on development economics and policy research at the Inter-American Development Bank (IDB) and held economic and policy roles in the Chilean public sector. Juan Ramón holds a Master of Public Administration from Columbia University, a Master’s Degree in Economic Analysis and a Bachelor’s Degree in Economics from the University of Chile.