Survey Reveals 51% Of UK Companies Plan AI Investment Over New Hires

A recent poll reveals that over half of UK business leaders intend to invest in AI rather than hire new staff, citing rising employment costs as a driving factor.

Conducted by Boston Consulting Group (BCG), the survey, first reported by the Financial Times,  highlights a significant shift in corporate priorities following Chancellor Rachel Reeves’ tax policy changes. This news follows the UK government announced plans to leverage AI for growth.

The study, shared with the Financial Times, found that 51% of business leaders plan to redirect funds from hiring to AI due to the increase in employers’ national insurance contributions announced in the October Budget.

Employers are also grappling with higher costs from an increased national living wage and anticipated workers’ rights reforms under the Labour government, which aim to eliminate zero-hour contracts and expand unfair dismissal protections, as reported by the Financial Times.

The poll, which surveyed leaders from 251 UK businesses employing more than 50 people, also revealed that 44% of respondents view AI investment as a priority this year. Meanwhile, 57% anticipate hiring fewer staff by 2025 due to these financial pressures and regulatory changes.

Companies have expressed concern about the financial strain, estimating billions of pounds in additional costs from higher national insurance rates and lower earnings thresholds for contributions.

An executive from one of the UK’s largest employers noted that the government “increasing the costs of employing people in multiple ways simultaneously right at the point when AI cost cutting possibilities emerge,” as noted by the Financial Times

Nick South, managing director at BCG, noted that advancements in AI, particularly generative AI, offer companies new opportunities to enhance productivity amidst rising employment costs. “Over time you will see organisations reshaping the size and shape of their workforces,” he said, as reported by the Financial Times.

This aligns with Sam Altman’s recent statement, where he suggested that by 2025, AI agents could enter the workforce and have a significant impact on company output. This trend underscores the growing role of AI in business strategy, particularly as companies navigate challenging economic conditions and rising regulatory demands.

Indeed, a recent WEF’s report predicted that digital access and AI will reshape the job market. Key technologies like AI, robotics, and automation are driving job growth in tech roles while decreasing demand for repetitive jobs. With skills evolving, WEF suggests that reskilling is essential, as 39% of skills may become obsolete by 2030.

The report highlights government policies as a major factor driving the shift from hiring staff to investing in AI. However, it is important to note that the idea that AI can accomplish more with fewer resources might be the most appealing aspect to executives looking to reduce costs.

However, this approach also carries risks for companies, as relying heavily on AI could create challenges and vulnerabilities in the long run.Indeed, a recent survey reported by Medium, identified key vulnerabilities in AI agents.

These include unpredictable user inputs, complex internal processes, inconsistent behavior across different environments, and risks from interacting with unverified external sources, making it difficult to detect cybersecurity threats.