Half of London businesses report workforce skills gap as AI reshapes job requirements

London Firms Report Skills Gap as AI Adoption Accelerates

London businesses face a mounting challenge as the AI skills gap widens across the capital. A comprehensive survey conducted by Survation on behalf of BusinessLDN polled 2,043 business leaders and found that 50% believe their workforce not equipped for AI demands 1

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. This marks a significant decline from 63% who felt confident about workforce skills just a year earlier, highlighting how rapidly AI adoption requirements are outpacing employee capabilities 2

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The data reveals an even more concerning trend: the proportion of London firms report skills gap at significant levels has more than tripled, jumping from 4% in 2024 to 15% in 2025—the highest level recorded since the annual survey began 1

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. An additional 35% of companies reported moderate skills and capacity gaps, suggesting that the challenge extends well beyond a small subset of organizations 2

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AI Reshapes Workforce Requirements Across Sectors

The survey found that three-quarters of London businesses are already using AI in some form, with only 5% stating they have no plans to adopt the technology 1

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. Among firms already deploying AI, 85% reported that the technology had fundamentally changed the skills required within their workforce. Companies identified a greater need for critical thinking, ethical reasoning, and decision-making skills—capabilities that go beyond traditional technical competencies 1

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The lack of advanced digital skills emerged as a critical bottleneck, with 60% of businesses with skills gaps reporting shortages in this area. Perhaps more alarming, 23% noted deficiencies in even basic digital skills among their workforce 1

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. Looking ahead, 78% of companies expect a significant need for advanced digital skills over the next two to five years, up from 66% last year and 56% in 2023 1

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Training Investment Reaches Record Levels

In response to these challenges, London businesses are taking action. A record 81% of firms plan to increase training investment over the coming year, up from 80% in the previous survey and 69% in 2023 1

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[2](https://www.techradar.com/pro/half-of-londons-businesses-say-workforce-are-not-equipped-to-meet-organizational-requirements-in-the-age of-ai). Only 13% expect training investment to remain unchanged, while just 5% anticipate reductions 1

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Mark Hilton, policy delivery director for people and skills at BusinessLDN, emphasized the urgency: "While London businesses are embracing AI, many are finding it challenging to stay on top of their workforce skills needs given the pace of change. Positively, employers are responding by increasing investment in training, but to properly close skills gaps it is essential we have a more agile skills system that is responsive to these rapidly changing needs" 1

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Job Market Shows Mixed Signals

Despite concerns about AI displacing workers, the survey revealed that 83% of businesses currently have job vacancies 1

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. The proportion reporting difficulties filling roles fell to 32%, down from 46% a year earlier—the lowest level since the survey began 1

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. Meanwhile, 76% of companies do not expect to cut headcount, suggesting the labor market remains relatively stable 1

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However, 20% of firms do plan to reduce staff numbers. Among those planning cuts, 25% cited cost-cutting measures, 24% pointed to reduced demand for entry-level staff due to AI, and 23% noted decreased demand for mid-career staff 1

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. The survey, conducted between November 25, 2025, and January 15, 2026, comes as London faces the highest regional unemployment rate in the UK according to Office for National Statistics data 1

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