Tech Nation has published its annual report on the UK technology sector, valuing it at $1.6 trillion.
The report points to a sharp rise in artificial intelligence investment and company formation across the country. AI companies attracted more than $11 billion in venture capital in the first half of 2026, the largest half-year on record for the segment.
AI now accounts for 32% of total UK tech value, more than double its share five years ago. Three in four venture dollars invested in the UK now go to AI businesses.
The UK remains Europe's largest AI market and ranks third globally for AI talent, with an AI workforce of 56,000 people and more than 10,000 researchers.
The data combines Dealroom figures with a survey of 1,300 founders and economic modelling by Thema AI. The findings suggest AI is reshaping both funding flows and how many start-ups define their businesses.
Among founders surveyed, 30% said their business would not exist without AI. Another 40% said they had launched entirely new products or services because of the technology, while 32% said they had built domain-specific AI agents.
Not all founders were upbeat. The report found 30% described AI as a bubble, while one in four said the rise of OpenAI and Anthropic was forcing them to change strategy.
Some companies are also trying to reduce dependence on external platforms. The survey found 30% of founders are actively cutting their reliance on third-party AI platforms by building their own tools.
Regional shift
Growth in AI activity is spreading beyond London. The East of England, Scotland and the North East were identified as the fastest-growing regional hubs.
Patterns differ across the country. The South is leaning towards AI activity in software, health and biotech, while the North is showing a stronger focus on industrial applications.
The report indicates that finance and pharma and biotech are emerging as leading areas for AI growth. Energy and defence technology are seeing the fastest workforce expansion.
More than 680 new AI start-ups were launched in 2025 alone. That pace of company creation adds to evidence of continued investor and founder interest despite signs of caution in the market.
UK AI has grown at a compound annual growth rate of 22%. Over the past three years, the sector has expanded three times faster than France and twice as fast as Germany.
Carolyn Dawson, Chief Executive Officer of Founders Forum Group and Tech Nation, highlighted the report's headline figures in a statement. "Homegrown AI champions - ElevenLabs, Granola, Nscale, Synthesia, Wayve, and more - are expanding globally and driving the growth of a UK tech sector now valued at $1.6 trillion. The UK is Europe's number one AI ecosystem, ranks third globally for AI talent, and our AI sector is growing twice as fast as our European counterparts," Dawson said.