Wider adoption of artificial intelligence among small businesses could add more than £42 billion a year to the UK economy, according to new research from the Federation of Small Businesses.
The business group’s latest findings suggest AI use among small firms has almost tripled in the past two years, rising from 20% in 2023 to 55% today.
However, growing concern over data security, copyright, transparency and legal liability risks slowing progress.
FSB found that 92% of small business owners now have concerns about AI, compared with 73% in 2023. The most common worries include inaccurate responses, security risks, misuse of intellectual property, lack of transparency around how AI models are trained and uncertainty over who is responsible when things go wrong.
Despite those concerns, many businesses already using AI report tangible benefits.
According to the research, 59% said the technology had improved productivity, 24% reported higher revenues and 22% said it had helped them grow their business. Just 8% said AI had reduced staff numbers.
FSB estimates that businesses adopting AI have seen an average 3% increase in revenue. Based on current SME turnover figures, the organisation believes wider and deeper adoption could unlock more than £42 billion of additional economic activity each year.
Tina McKenzie, policy chair of the Federation of Small Businesses, said: “There is a healthy realism among small businesses when it comes to AI, and it’s encouraging to see so many already finding practical ways to use it to save time, improve productivity and grow.
“Business owners can see the potential, but they are also asking sensible questions about how their data is used, who is responsible when things go wrong, and how they can adopt the technology safely.
“It’s only natural that people want to know the rules of the road before they take the leap and begin using AI. Small firms are looking for the confidence and certainty to use it well.
“If we can provide that, the prize is enormous. AI has the potential to help small businesses work smarter, reach new customers, develop new products and compete more effectively, unlocking benefits not just for individual firms but for the wider economy too.”
The FSB is calling for clearer rules around AI, including standardised information explaining how providers use business data, stronger protection for intellectual property, greater clarity around liability and practical support to help firms adopt the technology safely.
It is also urging government to consider tax incentives to encourage investment in AI and other productivity-enhancing technologies.
The research is based on a survey of 904 small business owners conducted between November 11 and November 24, 2025.
