AI Spend Surges as UK SMEs Cut Consulting and PR Budgets

UK businesses are moving their budgets away from outside advisers and towards AI tools. According to City AM’s latest Business Spend Pulse, the share of UK firms paying for management consultants and PR services fell sharply in September to just 4.2%, even though total spending rose 3.1% year on year. The consulting sector was also hit from its own side, cutting its outgoings by almost 4%, the steepest reduction of any sector.

AI is where the money is going. More than one in seven businesses paid for tools from leading AI firms in September, up from just 8% a year earlier. Spend per firm is rising too: according to Capital on Tap CEO Damian Brychcy, the typical AI-using business now pays about twice what it did a year ago. Anthropic was the biggest winner, with up to half of UK business spending with AI companies going to it in September, while ChatGPT’s share fell from 60% to 36%.

The data offers a clear view of SME behaviour, the same businesses that make up much of the bridging and development borrower base. It is based on millions of Capital on Tap card transactions across more than 300,000 British businesses, so it shows what smaller firms actually spend rather than what they report in surveys. Borrowers are still spending overall, but they are being selective, putting money into productivity tools and away from discretionary services.

Two points of caution apply. Card data misses larger contracts paid by invoice, and the figures show consulting and AI spending moving in opposite directions, not firms cancelling one to pay for the other. Even so, the direction is clear. SME borrowers are becoming more cost-conscious and more digitally capable, and they increasingly expect fast, tech-enabled service from their lenders. That includes quick decisions, efficient document handling and less manual back-and-forth.