1 in 5 UK firms has already spent over £1 million on AI tools

Mid-market UK businesses are showing strong confidence in AI, with significant investments already made and high expectations for returns, according to new research from tax firm BDO.

The survey of 500 mid-market companies, those with revenues between £10 million and £500 million, found that more than one in five (22%) have invested between £1.01 million and £5 million in AI tools to date.

Nearly half (44%) reported spending between £500,010 and £1 million, while around a third have invested £100,000 and £500,000. The survey was conducted between 16 February and 3 March 2026.

Overall, 97% of respondents expect to see a return on their AI investment within the next one to four years, signalling broad optimism about the technology’s potential to drive efficiency and growth.

Economic weight of the mid-market

Although mid-market businesses make up less than 1% of all UK companies, they play a disproportionately large role in the economy. They account for one in three private sector jobs and generate revenues equivalent to more than half of UK GDP.

Their embrace of AI could therefore have wide-reaching implications for productivity across the country.

Catherine Wilks, a partner at BDO who advises organisations on AI implementation, said many mid-market firms are innovative and ambitious.

“Mid-market businesses are often hugely innovative and ambitious. It is positive to see that many have already embarked on their own AI journey and are confident that they will get a return on their investment in the short to medium term,” she said.

Wilks added that many companies are currently focusing on internal applications such as productivity tools and back-office automation. However, greater opportunities may lie in generative AI, chatbots, faster financial reporting, and streamlining fragmented workflows, areas that could deliver even higher returns.

Sector variations and recommendations

Adoption rates vary significantly by industry. Professional services and retail are leading the way, using AI for both internal operations and customer-facing processes. Other sectors risk falling behind if they do not accelerate their efforts.

To support further uptake, BDO is calling on the government to introduce incentives such as tax credits, enhanced tax relief for AI tools, integration, and training, as well as grants for productivity-enhancing projects.

The same survey found that almost a third of mid-sized businesses (30%) have difficulties recruiting and retaining people with the right skills are one of their biggest barriers to growth over the next six months.

More than a third (37%) of businesses in the Midlands cite skills shortages as a key constraint on growth, with similar levels reported in the South West and Yorkshire (33%). This suggests the challenge is systemic rather than confined to specific regional economies.

Looking across sectors, some of the UK’s most economically significant industries are being hit hardest. Retail (32%), hospitality and leisure (32%) and manufacturing (30%) businesses are all struggling to find and keep staff with the right skills.

This comes at a time when the cost of hiring is rising, driven by increases to National Minimum Wage and National Insurance Contributions.

Despite these pressures, many mid-sized firms are taking proactive steps to strengthen their future talent pipelines.

Earlier research from BDO found that more than half of mid-sized firms plan to invest in apprenticeships in the next 12 months, while the latest data shows that 70% are actively engaging with potential recruits through careers fairs and similar initiatives.

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