In the capital, 64% of SMEs, are turning to technology investments to increase productivity and 43% are doing so to future-proof their company. This is compared to 45% UK-wide.

The data revealed that London SMEs are directing an average of 54% of their annual revenue to technology investments, such as data analytics and artificial intelligence tools, as they try to counter rising costs and climbing interest rates by increasing productivity.

Colin O’Flaherty, head of SME at Barclaycard Payments, said it is “promising” to see SMEs investing in technology to “future-proof” their operations.

The retail sector was especially keen to embrace new technologies, with two-thirds of SMEs in the capital doing so, including by establishing specific tech teams.

“Retail SMEs in particular have displayed a remarkable agility in adapting to evolving consumer behaviours by adopting emerging technologies – setting the stage for a brighter year ahead,” O’Flaherty said.

Sjuul van der Leeuw, CEO of Deployteq said: “Ramping up tech investment should be a top priority for SMEs, particularly with the rise of AI and automation dominating the global business agenda. Despite all the hype, far too many businesses still operate using outdated, manual systems for key functions such as sales and marketing, putting them at risk of falling behind when it comes to meeting customer expectations in the future.”

Steven Mooney, CEO of FundMyPitch said: “While it’s encouraging to hear that SMEs are putting tech investment at the top of the agenda, the reality is that many ambitious companies are still struggling to get access to the investment they need to take their business to the next level. From securing a credible valuation to getting a chance to pitch their proposition to investors, far too many entrepreneurs are missing the big chances that could turbocharge their organisation. This culture has to change if we want to unleash the true potential of our SMEs and create a business culture that backs the next generation, rather than ignoring it.”

Josh Boer, director at tech consultancy VeUP said: “It’s encouraging to see SMEs put tech investment at the very heart of their business strategy, particularly against the backdrop of stubborn inflation and soaring interest rates. The UK is home to some of the most exciting and incredible businesses on the planet, yet many are still way behind when it comes to getting access to funding and scaling up through cloud technologies. By prioritising investment in tech, the next generation of SMEs can grow rapidly, creating jobs and boosting the value of UK PLC.”

Much of the increase in tech spending is driven by the fact that consumers are predominantly moving to shop online.

Barclays’ research revealed that 70% of consumers use the internet to guide their shopping decisions, propelling a major surge in online grocery website traffic (54%) and in non-grocery site visits (42%).