More than a third of North East businesses say AI remains their biggest challenge, according to new research from accountancy and advisory firm BDO LLP. The firm's bi-monthly Mid-Market Tracker reveals that 38% of North East businesses rank the adoption of artificial intelligence and technological change as their top concern over the next six months. This concern outweighs high employment costs and higher energy and fuel costs.
Investment in AI and automation planned
As a result of these concerns, 35% of North East businesses plan to accelerate investment in AI or automation to help improve productivity. This comes as Government figures published earlier this summer show that 'self-reported' use of AI in UK businesses has increased from around 12% to around 35% since late 2023, with larger firms more likely to have adopted AI.
The findings follow the appointment of eight Industrial Strategy AI Sector Champions, who will be responsible for setting a clear national vision for how AI should be adopted in their sector. The sectors include clean energy, professional and business services, advanced manufacturing and digital and technology.
Skills gaps remain a key challenge
Despite the spike in AI adoption, BDO's Mid-Market Tracker – a survey of 500 businesses with revenues between £10m and £500m – highlights the pressures still facing regional businesses, with particular concern around skills. Almost a quarter of North East businesses (24%) are uncertain over what skills the business will need in future, with over a third of regional companies (35%) identifying a specific gap in AI skills amongst entry-level recruits.
Dan Brookes, partner in Yorkshire and North East at BDO, said: “As part of the Government’s Industrial Strategy, ministers have set out ambitious plans to accelerate AI adoption across a raft of sectors, aimed at boosting productivity, supercharging economic growth, and unlocking billions in added value.
“That ambition is shared by many regional businesses looking to develop, integrate and measure the effectiveness of AI, whether that’s across information and communication, improving business operations, or administrative or clerical roles.
Support needed to realise AI benefits
Brookes added: “However, given the rapid rate of technological change, there are clearly still significant challenges facing businesses when it comes to transitioning from legacy systems, scaling technology, and sustaining new AI models, often hindered by workforce capability gaps.
“While the role of AI champions is a positive move, more support will be required to ensure North East businesses benefit from the positive effects of AI on businesses.”
