Breaking down the barriers

While the potential impact of AI for European businesses is clear, the path to realising it isn't always smooth. Our research reveals the critical barriers that threaten to slow Europe's AI transformation - but also points to promising solutions.

The regulatory maze

For a startup founder in Munich or a CTO in Paris, navigating AI regulations can feel like solving a puzzle where the pieces keep changing. 44% of European businesses cite regulatory uncertainty as their primary barrier to AI adoption, with fragmented rules across borders creating particular challenges.

The numbers tell the story - regulation and compliance create resistance to AI adoption:

Almost seven-in ten (68%) businesses struggle to understand their responsibilities under the AI Act

Businesses estimate that 40% of their tech spend goes towards compliance with regulation.p

Businesses estimate that 40% of their tech spend goes towards compliance with regulation, a figure which rises to 45% among startups

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59% of startups report delaying AI plans due to regulatory concerns, while those that are uncertain about regulation are planning to reduce their AI investments by 28% next year

Yet there's cause for optimism. European businesses are broadly supportive of the AI Act's goals, with 71% believing it will positively impact their business. This shows the challenge is in creating a predictable regulatory environment that is clear and consistent across borders.

The skills emergency

"We have the technology, we have the vision, but we can't find the people to make it happen." This refrain echoes across Europe, with 40% of businesses citing the AI skills gap as a critical barrier to unlocking the benefits of AI, and 56% saying it is hindering innovation. Additionally, just 35% of businesses find it easy to train employees in new digital skills. This shortfall affects both organisations and the broader population, limiting Europe’s ability to fully leverage AI’s potential.

The impact of the skills gap is clear:

5.5 months is the Average time to fill AI-related positions.png

5.5 months: Average time to fill AI-related positions

44% report projects delayed due to skills shortages

46% see slower business growth due to their workforce’s level of digital skills.png

46% see slower business growth and 53% find increasing operational costs due to their workforce’s level of digital skills

49% of organisations are using online learning platforms to upskill their staff.png

49% are using online learning platforms

48% of organisations have set up in-house training programmes to upskill their staff.png

48% have set up in-house training programmes

45% of organisations report that they are training staff using external training courses t

45% report that they are training staff using external training courses

But this challenge is also creating opportunities. Forward-thinking organisations are responding creatively, implementing a range of training initiatives to upskill their staff:

Looking ahead, businesses estimate that 49% of future jobs will require AI literacy, and 47% will demand AI expertise within the next three years. As a result, companies are increasingly willing to offer higher salaries to attract skilled talent—by up to 42% for candidates with strong AI skills. Among startups, this premium rises to 47%.

The investment challenge

Businesses have leveraged various sources of funding to drive growth, including 59% who have sought bank loans or lines of credit, 44% government or private grants, and 37% angel investors or venture capital. However, for many businesses, especially SMEs[1], the financial barriers to AI adoption remain significant:

31% of SMEs cite high implementation costs as a major barrier.

Over a fifth (22%) of SMEs report that increased access to government grants or funding for AI projects would be helpful in enabling them to adopt the technology.

18% cite the cost of regulatory compliance as a barrier to adoption. Three-quarters of businesses (75%) indicate their associated tech spending on these compliance costs has increased in the last three years, and 75% expect this spending to continue to increase.

Yet those who overcome these barriers see quick returns:

76% find transformative or significant productivity gains.

93% report an increase in revenue.

Of those 93%, businesses find an average revenue increase of 31%.

View AI negatively due to concerns about privacy and data collection (66%).png

Questions about privacy and data collection (66%)

The technology feeling invasive (63%)

View AI negatively due to worries about manipulation or being presented with biassed conte

Worries about manipulation or being presented with biased content (48%)

The trust factor

While European citizens show growing enthusiasm for AI, concerns remain. 44% reported that the use of AI in everyday technologies, such as algorithms in social media, streaming platforms, and shopping recommendations made them feel more positively about the technology. However, for just over 1 in 10 (11%), this made them view AI more negatively. This 11% pinpointed specific concerns, including:

This report notes that in order to harness AI’s transformative power, these barriers must be addressed head-on. Regulatory clarity, investment in upskilling, increased government support, and fostering consumer trust are all essential to unlock AI's full potential for businesses and society alike. With coordinated action, Europe can position itself as a global leader in AI innovation while ensuring that the benefits of AI are shared broadly, deeply, and equitably.[1]

Unlocking Europe's AI future

1. Businesses with 250 employees or fewer.

Clear communication about AI use

Strong data protection practices

Proactive engagement with stakeholders

Leading organisations are showing how to build trust through: