SAS AI Cities Index 2026 - Who’s ahead, who’s stalling, and why it matters

By Glyn Townsend, Senior Director, Education Services – SAS EMEA

Artificial intelligence (AI) continues to reshape the UK economy, and in 2026, it’s transforming how organisations operate in ways we’ve never seen before.

From fraud detection systems protecting financial transactions and navigation platforms optimising travel routes, to clinical trial acceleration and predictive analytics supporting healthcare, AI already underpins many of the systems we rely on every day.

Yet while public attention largely remains focused on generative AI tools and large language models (LLMs), the real economic story of 2026 is AI maturity. How deeply it’s being integrated into enterprise workflows, where it’s benefitting communities, and who is using it best.

As the UK’s Government AI Opportunities Action Plan shifts from policy framework to active delivery, private and public capital is flooding into regional ecosystems.

Investment remains central to this ambition, as AI funding commitments continue across both public and private sectors, supporting data centres, innovation hubs, education initiatives and workforce development programmes.

Alongside infrastructure investment, there’s also increasing emphasis on addressing AI literacy and digital capability gaps across the workforce.

However, despite rapid progress, significant disparities remain between regions. Access to AI-related jobs, educational opportunities, innovation funding and business ecosystems is still concentrated in certain areas.

As AI becomes embedded across industries, the cities best positioned to succeed will be those capable of developing broad AI capabilities – not only in generative AI, but also across areas such as computer vision, data science, automation and trustworthy AI.

For investors, local authorities, and business leaders, the critical question has changed: Which cities are mature enough to turn AI investment into tangible economic growth?

What’s the current status of AI across the UK?

The UK faces growing pressures around productivity, workforce shortages, sustainability targets, healthcare demand and digital resilience.

AI is increasingly seen as a critical tool to address these challenges, while supporting economic growth across regions, amid calls to ‘level up’ the UK beyond the hub of London and the wider South-East.

Ensuring that AI development extends beyond established technology hubs will be essential if the UK wants to build a more balanced innovation economy.

The risk of inaction for cities and firms alike is substantial. Persistent digital skills shortages could limit productivity, limit innovation and reduce competitiveness. As AI becomes more embedded across more sectors, unequal access to digital skills and training, and even company funding, could also widen social and economic divides.

If not fixed, then over time, this can create a “two-speed workforce” where mobility and earnings potential are increasingly location-dependent.

On top of that, it can limit the diversity of ideas, something incredibly important when widespread AI adoption is still in its infancy. This can slow regional entrepreneurship and underutilise talent and infrastructure, which could weaken the UK’s global position in AI development and deployment.

Businesses, universities and local authorities therefore have an important role to play in preparing the current and future workforce for an AI-driven economy.

To build a balanced, resilient innovation economy that extends beyond London, cities must prove that they can support a full-circle AI lifecycle - from classroom to commercial offices.

Against this backdrop, SAS has created the AI Cities Index 2026, examining for the fifth consecutive year which UK cities are best positioned to succeed in the AI economy.

This year for the first time, SAS analysed the following key indicators designed to measure each city’s AI maturity:

• Talent pipeline: Graduate outcomes for computing and engineering subjects & the volume of AI-specific university courses in each city.
• Market demand: AI-related job availability within a five-mile radius and AI roles in local councils.
• Ecosystem density: The total number and exact proportion of AI-focused businesses active in the city.
• Capital absorption: Average AI funding awarded from Innovate UK R&D per business - a key proxy for investment maturity.
• Infrastructure: Average business broadband speeds capable of handling heavy enterprise data loads.

The most AI-ready cities in the UK

Manchester retains its position as the UK’s most AI-ready city for the third consecutive year, maintaining leadership through a combination of educational strength, business activity and AI employment opportunities.

The city achieved the highest overall score in the 2026 index (140 points) and continues to outperform other regional centres in several areas.

Manchester isn’t just home to AI companies, it integrates them too. The city recorded:

• The highest number of AI businesses in the index (655 organisations), representing 2.8% of its entire business landscape
• One of the strongest levels of AI employment outside London – second only to its neighbour Salford, which likely dominates due to being home to Media City
• High graduate outcomes in computing and engineering disciplines
• Significant Innovate UK investment activity, averaging more than £279,000 per business for AI and Data Economy grants.

The city remains one of the UK’s fastest-growing digital and fintech hubs, supported by strong university links and continued investment across software, analytics and AI innovation.

Manchester’s maturity is illustrated by the launch of the University of Manchester’s Unit M Deep Tech Accelerator, which helps researchers and founders turn AI and science innovation into commercial businesses across areas including AI, biotech and climate tech.

The city is also increasing investment more broadly, with Manchester City Council approving a budget exceeding £1 billion for the first time, supporting infrastructure, development and long-term growth initiatives.

Bristol - a new southern powerhouse?

This year, Bristol climbed from fourth to second place (138 points), narrowly behind Manchester. Bristol benefits from strong R&D funding levels, excellent broadband infrastructure and one of the highest concentrations of AI-related businesses.

The region is also benefiting from strong university collaboration, particularly between the University of Bristol and local tech businesses, helping to commercialise research into areas such as machine learning, robotics and quantum technologies. Bristol is home to one of the UK’s largest concentrations of microchip and semiconductor companies, creating strong demand for AI-driven engineering and automation tools.

At the same time, the University of Bristol is helping position the city at the centre of the UK’s long-term AI infrastructure strategy. The university recently announced plans to develop a new National AI Data Facility alongside Isambard-AI, the UK’s most powerful supercomputer. Described as a “British Library for the AI age”, the project will support large-scale AI research across areas including robotics, climate science and drug discovery, further strengthening Bristol’s role as a national AI research hub.

Birmingham climbed into fifth position (previously sixth), driven by the largest number of AI-related university courses analysed (199) and continued growth in AI jobs and innovation activity.

Oxford’s fourth-place ranking reflects its strength as a global education powerhouse and leading AI research hub. The city continues to benefit from the University of Oxford’s world-class reputation in developing AI talent, driving research excellence, and supporting the creation of high-impact spinouts and commercial innovation.

A major development this year was the launch of the new Oxford-UBS Centre for Applied AI, backed by £15 million in funding from UBS through to 2030. The partnership will bring together researchers, business leaders and AI specialists to focus on areas including AI governance, future workforce transformation and practical business applications of AI. The centre will also support a dedicated team of researchers working on real-world AI deployment across industries including financial services and the wider economy.

New entrants to the top 20

For the first time since the index began, Derby has entered the UK’s top 20 AI cities for 2026, ranking 13th overall.

Derby, home to powerhouses like Rolls-Royce, Network Rail and Alstom (formerly Bombardier), recorded the highest average InnovateUK funding per business of all locations analysed. It received more than £2.6 million per business, significantly ahead of larger cities and largely down to companies based there being major drivers of AI adoption in engineering, including predictive maintenance, digital twins, and advanced R&D.

Derby combines strong graduate outcomes in computing and engineering with a long-established base in advanced manufacturing and transport. With major employers in aerospace, rail and engineering, the city is well positioned to apply AI in areas such as predictive maintenance, automation and digital engineering.

The council is also leading the way in public sector AI adoption, delivering one of the UK’s largest local government AI rollouts through a £7 million partnership with ICS.AI, using generative AI to improve citizen services and internal efficiency at scale.

Southampton also entered the top 10 this year, rising from 26th place to 6th position. A high proportion of council staff have AI and data-related roles, and Southampton was also among the best for InnovateUK support, at an average of £330,000 per business.

SAS top AI cities 2026

1. Manchester
2. Bristol
3. Glasgow
4. Oxford
5. Birmingham
6. Southampton
7. Edinburgh
8. Leeds
9. Liverpool
10. Cambridge

Several other cities in the index performed particularly strongly in specialist areas:

• Exeter achieved the strongest graduate outcomes score among all cities analysed at 84%
• Cambridge recorded the highest proportion of AI-focused businesses (almost 8% of all businesses)
• Glasgow performed strongly across education, jobs and AI business activity.

The results show that AI readiness is increasingly becoming geographically diverse, with strong regional ecosystems emerging well beyond London.

Which cities climbed the rankings in 2026?

Several smaller and mid-sized cities improved their AI readiness performance this year, demonstrating growing regional maturity.

Aberdeen climbed two places thanks to increasing AI business activity and strong broadband infrastructure.

Chester maintained momentum following growth in university AI provision and graduate outcomes.

Durham performed strongly due to exceptional graduate employment outcomes, while Preston benefited from improvements in AI business representation.

The rise of smaller cities reflects a broader shift in the UK AI landscape.

Innovation is increasingly spreading beyond traditional technology centres, creating opportunities for more balanced regional development, and for people to really benefit from artificial intelligence.

This trend highlights the importance of sustained investment in local AI ecosystems through:

• Regional innovation funding
• AI skills programmes
• University partnerships
• Local business support initiatives
• Infrastructure investment

These developments will be critical if AI growth is to be shared more evenly across the UK.

The least AI-ready cities

The data highlights continued disparities in AI readiness across smaller cities.

Areas including Truro, Ripon, Perth, Southend-on-Sea and Wakefield recorded lower scores due to limited AI employment opportunities, fewer AI businesses and lower educational provision.

Lowest-scoring cities in AI readiness:

• Truro
• Ely
• Lichfield
• Ripon
• Perth
• Wrexham
• Newry
• Bangor
• Southend-on-Sea
• Inverness
• Wakefield

Many of these cities performed strongly in individual categories such as graduate outcomes or broadband infrastructure but lacked broader AI ecosystems.

This demonstrates that AI readiness increasingly depends on a combination of talent, investment, education and business activity rather than any single factor.

Why is this research important?

AI adoption is accelerating across the UK, yet skills shortages remain one of the biggest barriers to growth.

Many employers continue reporting difficulties recruiting workers with digital, analytical and AI-related capabilities, and education therefore remains critical. Universities not only play an important role in educating the future workforce, but also in investing in important research trials that impact our lives.

Take one of the most significant public health collaborations in modern UK science, the Oxford-AstraZeneca COVID-19 vaccine work at the University of Oxford. It used data modelling and clinical research to accelerate vaccine development and deployment.

And while it predates today’s generative AI boom, the University of Leicester is internationally recognised for its role in the 2012 discovery of King Richard III, achieved through a pioneering blend of archaeology, DNA analysis and historical research. It is now widely seen as an early example of the kind of data-driven, computationally enhanced approach that underpins modern AI-enabled science.

While universities play a key role, there is also an urgent need to upskill the current workforce, which is being addressed through a UK government initiative that aims to train 10 million workers in the essential skills needed in AI and tech over the next five years. SAS is one of the founding partners supporting this initiative by providing free training materials.

Generative AI continues expanding rapidly across workplaces, lowering barriers to adoption for organisations and supporting personalised learning, productivity and automation.

However, AI implementation still requires oversight, governance and human expertise - particularly in areas such as healthcare, education and public services.

The UK continues investing heavily in AI infrastructure and regional development, while businesses increasingly integrate AI technologies into everyday operations.

The challenge now is ensuring that growth reaches every region so disparities are not felt - smaller cities are clearly beginning to improve their AI maturity levels, but maintaining the UK’s global competitiveness will require investment in:

• Digital and AI skills
• Education pathways
• Innovation funding (and applying to get it)
• Workforce development
• Regional AI ecosystems

The cities that succeed in building these foundations will be best placed to benefit from the next phase of AI transformation.

Methodology

SAS analysed UK cities using eight indicators:

• Graduate outcomes in computing and engineering subjects, according to HESA (Higher Education Statistics Agency)
• AI-related jobs within a five-mile radius, according to Indeed
• Average broadband speeds available to businesses
• Average Innovate UK funding awarded per business (2025/26), based on AI and Data Economy funding
• Number of AI businesses in each city, according to LinkedIn
• Proportion of businesses focused on AI, using ONS enterprise figures to benchmark against LinkedIn figures
• The number of city council staff employed who reference AI, automation, digital transformation, data analysis or data scientist
• The number of university courses referencing artificial intelligence, according to UCAS.

Cities received weighted scores across all categories to produce an overall AI readiness score.

Data correct as of 2026.

Glyn Townsend
Senior Director, Education Services, SAS EMEA