New research from Google has revealed that innovation among UK small businesses is being stifled by a lack of time and resources. According to the findings, 59% of SME owners have had to put “game-changing” ideas on hold over the past year due to limited capacity to bring them to life.
For many, these unrealized projects could have made a significant difference — nearly two-thirds of business leaders said their ideas could have boosted revenues by up to 30%. Google estimates that AI-powered tools could unlock a £198 billion productivity and growth boost across the UK’s SME sector.
“Over half of SMEs have had to pause innovation,” said Debbie Weinstein, Google’s EMEA President. “AI can free up time for leaders to focus on strategic, innovative tasks that drive both business growth and economic progress.”
Productivity Boost Through AI
Research by Public First suggests that AI platforms like Google Workspace with Gemini could improve SME productivity by 20% — the equivalent of adding an extra working day each week.
For small business leaders who already average nearly 49 working hours a week, AI adoption could finally give them the time to act on their innovative ideas.
Business Secretary Peter Kyle praised the initiative, saying: “AI is transforming the way we work. This partnership gives small businesses hands-on experience to capitalise on AI, helping them innovate, grow, and compete globally.”
Google’s nationwide “AI Works for Business” tour, run in collaboration with the Department for Business and Trade and NatWest, will visit Manchester, Leeds, Edinburgh, and Cardiff to help SMEs learn how to use AI for efficiency, cost savings, and growth.
AI Scepticism Still a Barrier
Despite growing awareness, AI adoption among UK SMEs remains limited. While 86% say they are familiar with AI technology, only 31% currently use AI-powered tools, and 15% plan to do so in the near future.
Industries such as IT and telecoms lead in implementation, but manufacturing, retail, and hospitality lag behind.
“The AI story is real, but it’s still early days,” said Hugh Milward, Microsoft UK Vice President. “Small businesses need both the skills and confidence to apply these tools effectively.”
Most early adopters use AI for automation and marketing, with only 19% applying it to strategic decision-making. Concerns about data privacy, creativity, and ethics continue to deter others.
The Bigger Picture Across Europe
Google’s findings align with trends seen across Europe. A Qonto study of SMEs in France, Germany, Italy, and Spain showed that although 46% use AI tools, many lack basic digital infrastructure such as accounting systems and video conferencing platforms.
Alexandre Prot, Qonto’s CEO, warned that “European SMEs are chasing flashy AI tools while neglecting core digital foundations.”
For the UK, the challenge lies not only in adopting AI but in using it strategically — applying it to real problems that drive innovation, productivity, and long-term growth.
