AI could unlock £198bn boost for UK SMEs as Google Cloud partners with government and NatWest

Nearly two-thirds of UK small and medium-sized enterprises are shelving promising ideas due to time and resource pressures, according to new research from Google Cloud. The study found that 59% of SME owners have paused potentially transformative projects despite recognising their potential to drive growth.

Google Cloud’s report highlights how artificial intelligence could help bridge this gap. AI-powered tools, such as Google’s Gemini-backed Workspace applications, are projected to improve productivity by around 20%—equivalent to an extra working day each week. The uplift could generate up to £198 billion in additional economic value for UK SMEs, underscoring AI’s potential to transform smaller businesses.

To accelerate adoption, Google has joined forces with the Department for Business and Trade (DBT) and NatWest for a nationwide tour visiting Manchester, Leeds, Edinburgh and Cardiff. The initiative aims to show SMEs how AI can improve efficiency and innovation by addressing resourcing constraints. Business Secretary Peter Kyle said the government is committed to working with private sector partners like Google “to deliver meaningful training and support for SMEs adopting new technologies.”

Despite the clear opportunity, adoption remains slow. Only a third of UK workers currently use generative AI at work, and just half of them do so daily. Google’s study found that even short AI training sessions can dramatically increase confidence and usage, suggesting that accessible education is key to unlocking wider uptake.

The British Chambers of Commerce reports similar findings: 43% of SMEs have no immediate plans to adopt AI, though active users have risen from 25% to 35% in the past year. Business-to-business firms are leading adoption, while consumer-facing and manufacturing sectors remain cautious.

Barriers persist. A Microsoft and WPI Strategy study identified a lack of guidance, internal expertise and concerns over upfront costs as major obstacles. Initiatives like Google’s partnership with NatWest and the DBT aim to close these gaps by providing practical support and tools tailored to small business needs.

Debbie Weinstein, President of Google EMEA, said AI offers “enormous potential to free up time for business leaders to focus on strategic, innovative tasks that will spur growth for their businesses and the wider economy.”

While challenges remain, the collaboration between government, technology leaders and financial institutions marks a decisive step toward responsible AI adoption. With focused training and support, SMEs can harness AI to unlock innovation, strengthen competitiveness and help position the UK at the forefront of AI-driven business growth.

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