The Trillion-Dollar Problem at the Heart of the AI Boom
Oracle’s $165 Billion Data Center Plan Hits a Gas Pipeline Delay CityAM.com is the online presence of City A.M., London's first free daily business newspaper. Both platforms cover financial and business news as well as sport and… Take your pick of alarmist projections about the future of the global economy from top tech leaders.
Monzo’s founder, Tom Blomfield, reckons unemployment will surge over the next five years as more and more human output is replaced by AI.
Elon Musk reckons it will be near 100 per cent in a decade.
What is actually happening on the ground right now? I’ve been sent some fascinating data on AI spend byCapital on Tap, one of the UK’s biggest SME lenders.
The firm tracks spending patterns among tens of billions of pounds worth of transactions each year.
AI adoption has increased massively among small businesses over the past couple of years, the data found.
Just 3.2 per cent of SMEs spent money on the services of AI companies in the second quarter of 2024.
That has since quadrupled to 12.8 per cent in the second quarter of 2026.
Unsurprisingly, the mean average spend on AI has also rocketed, going up from £93 per small business to £288 over the same period.
The median average spend for the second quarter of this year is in fact much lower, at £75.60, because the mean is skewed by a handful of big spenders (£3,159 each for the AI evangelists in the 99th percentile of AI spending).
And on average, AI tools still account for only 0.1 per cent of the value of all the card spending that Capital on Tap processes.
Extrapolate that out to the wider economy and that puts total spending on AI services at just £4bn per year in the UK – less than a tenth of the turnover of Tesco.
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