Most UK businesses still can’t figure out AI, and the skills gap is the reason why

Eight in ten UK businesses have no active plans to adopt artificial intelligence, and the primary reason is not cost or regulation but a straightforward lack of in-house know-how. That’s the headline finding from new research commissioned by the UK’s Department for Science, Innovation and Technology (DSIT), and it makes for uncomfortable reading.

The study, the most comprehensive of its kind to date, found that only 1 in 6 UK businesses (16%) currently use AI. Among those that have tried to roll it out more widely, 54% cite limited skills and expertise as the single biggest obstacle to scaling. Among businesses planning future adoption, that figure rises to 68%, higher than cost (23%) or regulatory uncertainty (28%).

Nasstar, a UK-managed IT services provider, has paired the government data with its own Google Trends analysis, and the search numbers are revealing. UK interest in “how to use AI” increased 90-fold between January 2022 and early 2026, hitting an all-time peak in December 2025. Searches for “AI use cases” were virtually non-existent before 2024 and broke records in January 2026. Search volumes for “learn AI” rose by almost 2,000% across the same four-year window. The picture that emerges is of a workforce that has clocked that AI matters but has not yet worked out what to actually do with it.

Sean Morris, Chief Technology Officer at Nasstar, explained:

“The government’s research confirms what we hear from businesses every day: the challenge isn’t a lack of ambition around AI, it’s a lack of the expertise needed to get started safely and at scale. Most organisations know they should be doing more with AI, but they’re not sure where to begin, and they don’t have the people internally to figure it out.

“The good news is that the tools most UK businesses need are already sitting inside Microsoft 365, in the applications they use every day. The barrier isn’t access to technology. It’s knowing how to unlock it.”

The productivity case for getting this right is hard to ignore. Three-quarters of businesses that have adopted AI report improved workforce productivity, and 57% say they have developed new or improved processes as a result. The most commonly cited motivation for wanting to adopt AI was simply to work more efficiently, cited by 65% of respondents. The tools are there, the appetite is there, and yet 80% of the market is still sitting it out.

Separate Microsoft research from January 2026, based on a Censuswide survey of 1,000 UK senior decision-makers, found that 84% of organisations are now deploying AI for competitive advantage, up from 40% in 2025. Nearly a quarter of leaders say they are worried their competitors are pulling ahead. That gap is only going to widen.

Ash Ward, Comms Capability Lead at Nasstar, said:

“There’s a risk here that isn’t being called out enough. AI won’t level the playing field; it’ll widen the gap between organisations that know how to use it and those that don’t. The data already shows the issue. The skills gap isn’t something on the horizon. It’s here now, and it’s hitting smaller businesses harder than most.

“The technology itself isn’t the blocker anymore. Tools like Microsoft Copilot are already built into Word, Excel, Teams, and Outlook, platforms people use every day. What’s missing is the structure around it. Clear use cases, a plan for adoption, and the right guidance to make it actually work for us.

“For businesses unsure where to start, Microsoft has made a lot of this accessible. There are hundreds of free Copilot training modules available through Microsoft Learn, many aligned to specific roles and industries. The capability is there. It comes down to whether organisations choose to build it.”