Manchester has been named the UK’s most AI-ready city for the third year in a row, and the message for business owners is hard to miss: the country’s AI economy is no longer a London story.
The SAS AI Cities Index 2026, now in its fifth year, ranks cities outside the capital across eight criteria, including AI job opportunities, innovation funding, education, broadband speed and business activity in the sector.
Manchester’s grip on top spot rests on sheer commercial depth. The city hosts 655 AI businesses, the most of any location in the index, representing 2.8 per cent of its entire business landscape. It also boasts some of the strongest AI employment outside London, second only to neighbouring Salford and its Media City cluster.
For founders weighing up where to base or expand a business, the funding picture matters just as much. Innovate UK grants for AI and the Data Economy average more than £279,000 per business in Manchester, while the city council has approved a budget exceeding £1 billion for the first time to support infrastructure and long-term growth.
The talent pipeline is being built deliberately. New ‘MEGA hubs’, a collaboration between Salford-based IN4 Group and the Greater Manchester Combined Authority, will give more than 3,000 secondary school pupils access to technology learning and an AI Academy, with sites planned for Rochdale, Salford, Tameside and Wigan. The Future of Work Alliance, a five-year, £5 million initiative announced in May, and the University of Manchester’s Unit M Deep Tech Accelerator add further weight. Little wonder the city was also recently crowned the best city outside London for women founders.
The chasing pack is the real story for SMEs elsewhere. Bristol climbed from fourth to second on the back of strong R&D funding and its semiconductor cluster, Birmingham rose to fifth with the largest number of AI-related university courses, and Derby entered the top 20 for the first time, securing the highest average Innovate UK funding per business of any city at more than £2.6 million. Southampton jumped 19 places into the top ten, helped by average Innovate UK support of £330,000 per business.
That regional spread should sharpen minds, given repeated warnings that smaller firms risk being left behind on AI and that UK businesses are underinvesting in the technology compared with global leaders. The infrastructure is increasingly on SMEs’ doorsteps; the question is whether they use it.
Glyn Townsend, senior director of education services at SAS for EMEA, said: “It’s great to see so much development in other cities too, proving that AI excellence doesn’t need to be London-centric. The likes of both Southampton and Derby, which have rapidly risen through the rankings, shows that cities are embracing and harnessing AI, recognising how it can be used to boost jobs, increase opportunities and assist in long-term economic growth.”
SAS is a founding partner in the government’s programme to train 10 million workers in AI skills by 2030, offering businesses free training materials and access to its AI experts.
Kanishka Narayan, AI minister at the Department for Science, Innovation and Technology, said: “We’re mobilising the UK’s businesses, innovators, and our trade unions to unlock AI’s potential for Britain – with more than £200 million earmarked for work that will drive responsible AI adoption in every part of the country.”
