AI drives productivity gains for UK businesses but barriers to growth remain
Artificial intelligence (AI) is driving significant productivity gains across UK businesses, but further action is needed to translate these gains into measurable business value, according to the latest EY-Parthenon CEO Outlook Survey.
The survey of 100 UK CEOs found that half (50%) ranked AI-enabled tools and applications among their organisation’s top three drivers of productivity gains over the past 12 months, ahead of business process redesign and simplification (40%) and workforce reskilling (38%).
However, only 14% said they have comprehensive, real-time visibility of AI costs and almost a third (32%) reported significant gaps in their ability to assess return on investment.
The challenge of realising value from AI extends beyond measuring returns. More than a third (34%) of UK CEOs identified legacy technology and operating models as the biggest obstacle to converting productivity gains into measurable business value, followed by organisational complexity, regulation or increased risk management (29%).
Despite challenges in measuring ROI, UK CEOs are taking steps to convert productivity gains into tangible business value. More than two-fifths (44%) are reinvesting those gains to drive growth, innovation or transformation.
Greater output without increased headcount or capital was the leading productivity benefit, cited by 34% of UK CEOs, ahead of faster delivery (19%) and more time for higher-value work (15%).
Silvia Rindone, EY-Parthenon UK and Ireland managing partner, said: “The AI conversation has shifted from adoption to impact. UK CEOs now want clear evidence that their investment is delivering stronger productivity and measurable business value.
“We are seeing some encouraging signs of that transition, with AI emerging as a leading contributor to productivity gains and businesses reinvesting those efficiencies to support future growth and transformation. However, productivity alone will not determine the returns. Businesses need the right operating models, processes and skills to turn productivity improvements into sustainable value.
“CEOs must now align capital, technology and talent to convert AI gains into sustainable growth and competitive advantage.”
AI moves into investment and transaction decisions
UK CEOs are using AI to assess investment and transaction opportunities. More than half (54%) said their organisation is piloting AI in selected transaction-evaluation activities, while 28% are using it across multiple activities. A further 9% have embedded AI across most transaction-evaluation activities, making it central to their transaction strategy.
Transaction activity remains a strategic priority for UK CEOs, with almost half (48%) planning to pursue mergers and acquisitions (M&A) over the next 12 months, while 61% are considering divestments and a similar proportion (59%) are exploring strategic alliances.
Matthew Ringelheim, EY UK and Ireland AI & data leader, said: “UK CEOs have a strong appetite for transaction activity over the next 12 months and AI is playing an increasingly key role in identifying and assessing opportunities, informing decisions and accelerating due diligence, with most UK CEOs already piloting or using the technology across transaction-evaluation activities.
“However, AI is no substitute for sound transaction fundamentals. Realising value still depends on rigorous analysis, clear strategic choices and disciplined execution. Businesses that combine these fundamentals with AI-enabled insights will be better placed to assess opportunities and make more informed investment decisions.”
Skills set to become a greater constraint on growth than capital
The research also underlines the growing importance of workforce capabilities as AI adoption accelerates. Nearly three-quarters (74%) of UK CEOs expect skills shortages to become a greater barrier to growth than access to capital within the next three years.
71% also agreed or strongly agreed that over the same period, AI will have a greater impact on employees’ roles, skills and the organisation of work than on workforce size. Despite this, nearly half (47%) agreed or strongly agreed that their organisation is not developing workforce skills quickly enough to keep pace with AI innovation and realise its full value.