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

Half of London firms report skills gap amid AI boom

Half of London's businesses say their workforce does not currently have all the skills needed to meet their organisations' requirements in the age of artificial intelligence (AI), according to a survey of more than 2,000 business leaders. The poll, conducted by Survation on behalf of BusinessLDN, found that 50% of firms believed their existing workforce had the necessary skills and capabilities, down from 63% a year earlier. The proportion of firms reporting significant skills and capacity gaps reached 15%, up from 4% in 2025 and the highest level recorded by the annual survey. The findings come amid growing use of AI across the capital. Three-quarters of businesses surveyed said they were already using AI in some form, while only 5% said they had no plans to use the technology. Among firms already using the technology, 85% said it had changed the skills required within their workforce. According to the survey, businesses reported "with a greater need for critical thinking, ethical reasoning, and decision-making". The survey of 2,043 business leaders from various sectors also found: * 35% of firms reported some skills and capacity gaps * A further 12% plan to adopt AI and 8% are investigating its use * 60% of businesses with skills gaps lacked advanced digital skills, while 23% reported shortages in basic digital skills * 78% expect a significant need for advanced digital skills over the next two to five years, up from 66% last year and 56% in 2023 * 13% expect training investment to remain unchanged and 5% expect it to fall * 17% of businesses reported no job vacancies * 20% plan to reduce staff numbers, while 76% do not expect to cut headcount * Among firms planning job cuts, 25% cited cost-cutting, 24% reduced demand for entry-level staff due to AI, 23% reduced demand for mid-career staff, and 14% the economic climate or business model changes. Mark Hilton, policy delivery director for people and skills at BusinessLDN, said: "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." The survey found a record 81% of firms planned to increase investment in training over the coming year, up from 80% in the previous survey and 69% in 2023. At the same time, 83% of businesses said they currently had job vacancies. However, the proportion reporting difficulties filling roles had fallen to 32%, down from 46% a year earlier and the lowest level since the survey began. The survey was conducted between 25 November 2025 and 15 January 2026 and follows recent Office for National Statistics data showing London has the highest regional unemployment rate in the UK. Listen to the best of BBC Radio London on Sounds and follow BBC London on Facebook, X and Instagram. Send your story ideas to [email protected]

Half of London's businesses say workforce are not equipped to meet organizational requirements in the age of AI

* Significant skill shortages have more than tripled since last year * Workers are even lacking in basic digital literacy and skills * Four in five London companies are increasing training investment In a survey of more than 2,000 London business leaders, one in two believe their workforce doesn't currently have the skills required to meet their AI adoption needs. Though this is a decrease compared with 63% last year, it still leaves half of companies struggling to keep pace with AI. However, the proportion of businesses reporting significant skill shortages rose to 15% this year, compared with just 4% last year, implying that even basic training isn't being taken care of. The AI skill shortage is growing According to BusinessLDN, this is the highest level recorded since the annual survey began. But besides significant skill shortages, more than a third (35%) also warned they face moderate shortages. AI aside, 60% also noted a lack of advanced digital skills and 23% shared a lack of even the most basic digital skills, but while companies don't have the human capacity to develop AI strategies at this point, three in four have gone down the route regardless. "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," Policy Delivery Director for People and Skills Mark Hilton wrote (via the BBC). It's this exact lack of digital and AI skills that could be creating jobs in the short term, though, because four in five (83%) businesses revealed they had job vacancies - an opposite narrative to multiple reports that argue AI is replacing entry-level roles. Supporting that, three-quarters (76%) don't expect to cut headcount, suggesting we could finally have reached a balance after earlier mass layoffs. But while countless surveys reveal that companies aren't supporting their workers with the right upskilling schemes, London looks to be doing things differently with 81% planning to increase training investment over the next year. Follow TechRadar on Google News and add us as a preferred source to get our expert news, reviews, and opinion in your feeds.