New data reveals a significant trend among British businesses: while a third intend to invest in artificial intelligence tools next year, an even greater number are prioritising investment in their workforce's skills, signalling a potential bottleneck for the nation's technological adoption.
The Investment Paradox: Technology vs. Talent
According to the latest Lloyds Bank Business Barometer, 33 per cent of UK firms plan to invest in AI during 2026, with boosting productivity cited as the primary driver. However, the research uncovered a more pressing focus: 35 per cent of the 1,200 companies surveyed said they plan to increase spending on team training in the same period.
This suggests that business leaders see upskilling existing staff as a more immediate priority than deploying new technology. Paul Kempster, managing director for commercial banking coverage at Lloyds Business & Commercial Banking, emphasised the long-term view, stating: “These investment priorities will support businesses’ long-term growth, helping them capitalise on opportunities while building a firm foundation well beyond 2026.”
Government Push and Practical Barriers
The corporate emphasis on skills development follows Chancellor Rachel Reeves's Autumn Budget, which unveiled a £1.5bn skills package. This funding, aimed at tackling labour shortages, includes support for digital and AI-related training, reforms to apprenticeships, and incentives for employers to bridge the tech expertise gap.
Despite clear incentives, the path to AI integration is not smooth. Earlier Lloyds research showed substantial benefits for adopters, with 82 per cent reporting productivity gains and 76 per cent seeing improved profitability. Yet adoption remains cautious and uneven. Retailers report the strongest productivity impacts, while manufacturers are most likely to see profit improvements.
Firms continue to face significant practical hurdles, including:
- High upfront costs for implementation.
- A pronounced shortage of technology-specific skills.
- Ongoing concerns over data privacy.
- Soaring energy demands associated with running advanced AI systems.
A Cautious Outlook Amid Economic Shifts
The report indicates a measured approach from the business community. While over half of surveyed businesses plan some form of AI investment in the coming year, only a quarter of those yet to adopt the technology expect to start using it.
This caution exists alongside signs of stabilising business confidence, which rose to 47 per cent in December—a ten-point increase since the start of 2025. Optimism about the wider economy also reached a four-month high.
However, a softer consumer demand backdrop presents another challenge. Expectations of falling prices have weighed on spending, with Sensormatic Solutions data showing UK in-store footfall fell nearly seven per cent year-on-year on the final Saturday before Christmas.
The confluence of these factors paints a complex picture for 2026: ambitious technological investment plans exist, but their success hinges on solving the human capital equation first. The race is on to equip the UK workforce with the digital skills needed to turn AI potential into tangible business growth.
