AI adoption drives profit and productivity gains for UK businesses

UK businesses adopting artificial intelligence are reporting significant improvements in both profitability and productivity, according to new findings from the Lloyds Business Barometer.

The research reveals that nearly nine in ten firms (87%) using AI have seen increased productivity, while almost half (48%) reported a rise in profits over the past year – highlighting the growing role of the technology as a driver of business performance.

Among companies that experienced profit growth, the gains were substantial. Around half (48%) recorded an uplift of 11% or more, while 38% saw profits increase by between 6% and 10%. A further 13% reported smaller gains of up to 5%.

The findings come as investment in AI continues to accelerate across the UK. Two thirds (66%) of businesses have now invested in the technology, with most doing so at relatively modest cost. One third (33%) spent less than £25,000, while 18% invested between £25,000 and £100,000. Larger investments were less common, with 8% spending up to £250,000 and 7% exceeding that level.

Amanda Murphy, CEO for Lloyds Business & Commercial Banking, said businesses are increasingly viewing AI as a strategic growth tool.

“Businesses recognise AI as a powerful driver of growth, with gains that are delivering a competitive edge,” she said. “As companies increase their investment and adopt this new technology more widely, they will need clear oversight and robust processes to ensure these tools are used responsibly and transparently.”

Sector data shows that AI usage is highest in the services industry (70%), followed by retail (60%), construction (59%) and manufacturing (55%). Retail businesses also lead the way in AI investment, ahead of services and construction firms.

Regionally, London and the West Midlands are emerging as AI hotspots, with the highest levels of both adoption and investment. In the West Midlands, 83% of firms are now using AI, closely followed by London at 78%, with other regions trailing behind.

Businesses are also investing in workforce skills to maximise the benefits of AI. Customer service teams have seen the most upskilling (43%), followed by sales functions (29%), as companies look to embed AI into everyday operations.

Lloyds itself is leveraging AI to improve efficiency, recently launching a generative AI tool that can process complex real estate data in minutes rather than hours. The bank has also introduced an AI Academy to equip employees with practical skills and support wider adoption of the technology.