UK firms axe PR and consulting spend as AI tools muscle in

British businesses are shelving spending on public relations and consultancy firms as they embrace the capabilities of PR tools, according to City AM’s latest Business Spend Pulse.

The share of UK firms who spent money on management consultants and PR services fell sharply in September to just 4.2 per cent, despite an overall 3.1 per cent year-on-year increase in total spending.

The Spend Pulse uses data shared exclusively with City AM by Capital on Tap, a fintech providing business credit cards and spend management tools for SMEs. It is based on millions of Capital on Tap card transactions across more than 300,000 British businesses.

The consulting sector itself also pared back spending by almost 4 per cent in September, the largest cut of any sector, highlighting the financial pressure facing firms as they wrestle with declining customer numbers. Other sectors saw a jump in spend, including food retailers, which was up 9.3 per cent, property developers, up 7.9 per cent and leisure goods and services, up 4.2 per cent.

Anthropic pulls ahead of OpenAI

Meanwhile, spending on AI services rocketed, with more than one in seven forking out for the tools of top AI firms in September, compared with just eight per cent a year ago. 

Anthopic was the single-biggest beneficiary of the trend, accounting for as much as half of all spending on AI firms, while OpenAI’s ChatGPT fell behind, sliding from 60 per cent share down to 36 per cent.

“Established businesses are spending about 3 per cent more than a year ago, with discretionary spending rising faster than essential costs and most sectors up on the year, a sign small firms are investing for growth rather than simply covering the basics,” said Capital on Tap chief executive Damian Brychcy.

“AI adoption is still the biggest trend we are seeing. It is not just more firms using AI, each is spending more too: the typical AI-using business now spends around twice as much on these tools as a year ago.”

London continued to hold the top spot for the most AI-enabled city, with more than one in five businesses spending money on AI firms – but Edinburgh and Milton Keynes were close behind, with 17.1 per cent and 17.2 per cent using AI respectively. 

Following the firm’s trillion-dollar US IPO in June, UK firms are also increasingly turning to SpaceX, with share of spend on Starlink and other satellite services up by almost 50 per cent in a year.