Technology adoption patterns in the United Kingdom vary markedly by technology maturity, firm size, region and sector. UK firms perform well in the adoption of mature digital technologies, such as cloud computing and data analytics, and many SMEs have largely narrowed the gap with larger firms in basic digital capabilities. By contrast, adoption rates decline significantly for more advanced technologies, such as robotics and automation, where smaller SMEs lag further behind. Regional differences are marked: London and the South-East lead on the adoption of most technologies, while regions in the north of England show relatively lower adoption rates. There are also clear adoption differences between sectors: manufacturing tends to show higher adoption of AI, robotics and automation, while wholesale and retail trade are among the strongest adopters of accounting software and management-support programmes.
Based on interviews with local stakeholders, cost and relevance emerge as the most important barriers to SME technology adoption in the United Kingdom. Many SMEs, especially in sectors such as manufacturing, face high upfront costs, uncertain returns and difficulty in the identification of solutions that match their operational needs. Cultural and behavioural barriers also matter, including the average age of business owners in some sectors and distrust of technology vendors. Together, these factors lead to a “wait-and-see” approach, where SMEs adopt new technologies only after peer validation, thereby slowing diffusion across the wider business population.
Diffusion channels vary across sectors and technologies, but three mechanisms stand out. Peer learning is a critical driver of adoption, particularly in manufacturing where firms primarily rely on trusted examples and practical demonstrations as risk reduction strategies. Supply chain pressure can accelerate diffusion when buyers create incentives and provide support for suppliers to adopt technologies. Intermediary organisations play a central role at different stages of technology maturity: some connect firms with cutting-edge research and capabilities, while others help SMEs navigate a fragmented support landscape and reduce perceived risks.
The regional dimension is a core feature of effective technology adoption policy in the United Kingdom. Regional stakeholders from the three regions covered in the project (Greater London, West Midlands and North-East) highlighted the need for national policies to be flexible enough to adapt to local conditions, while also providing clear national guidelines and strong national branding to signal priorities and ensure policy coherence. Stakeholders commonly favoured national responsibility for funding decisions, combined with local decision making over spending choices to reflect regional needs and opportunities.
The multilevel governance of technology adoption policies remains largely ad hoc in the United Kingdom. There are no standing consultation mechanisms between national and subnational governments, nor between the public and private sectors, that are specifically dedicated to technology adoption policy. Nonetheless, current arrangements seem to function reasonably well in practice, as demonstrated by the recent consultative processes underpinning the Technology Adoption Review and the new Modern Industrial Strategy. At the regional level, collaboration among institutions often relies on informal, practitioner-led networks.
Stakeholders also identified some structural features that may hinder technology diffusion at scale. While the United Kingdom performs strongly in early-stage research and prototype development, it is perceived as weaker in research commercialisation. Innovation policy is also seen as relying too much on short-term grants, which can limit firms’ ability to undertake longer-term strategic investments and may contribute to fragmentation in programme delivery. As a consequence, stakeholders have called for greater attention on skills development and advisory services, including by strengthening management capabilities and workforce upskilling through short, industry-driven formats.
Choices on policy design also involve trade-offs, with the report highlighting a tension between light-touch programmes that have a broad outreach and others that offer more intensive support to smaller groups of firms. In this respect, some stakeholders favoured prioritising support for firms with the greatest productivity potential, while others advocated for a more inclusive approach so that the benefits of technology adoption spread beyond the best-performing SMEs. Concerns were also raised about the rigidity of some programmes, such as the apprenticeship levy and the R&D tax credit, including calls for reforms to strengthen their flexibility, predictability and administrative efficiency.