Manchester tops UK's AI-ready cities for third year

Manchester has been ranked the UK's most AI-ready city, holding the top position for a third consecutive year in the SAS AI Cities 2026 Index.

The annual ranking assesses cities outside London across eight measures tied to AI activity, including AI jobs, university courses, graduate outcomes, business numbers, broadband speeds, local authority roles linked to data and automation, and Innovate UK funding.

Manchester's lead was driven in part by the scale of its AI business base. The city recorded 655 AI organisations, the highest total in the index, representing 2.8% of its wider business population.

It also ranked strongly for AI-related employment within a five-mile radius and for graduate outcomes in computing and engineering. The research found that the city secured average Innovate UK AI and Data Economy grant funding of more than £279,000 per business.

The findings point to a city combining university output, business formation and public investment. That mix has helped Manchester stay ahead of other regional centres as competition for AI investment and talent intensifies across the UK.

Changing table

Bristol rose to second place from fourth in the previous ranking. Glasgow placed third, followed by Oxford in fourth and Birmingham in fifth.

Southampton ranked sixth, Edinburgh seventh, Leeds eighth, Liverpool ninth and Cambridge 10th. Birmingham improved from sixth place, while Southampton made one of the biggest jumps into the top tier after previously sitting much lower in the table.

Derby was another notable mover, entering the top 20 for the first time in 13th place. It recorded the highest average Innovate UK funding per business in the index, at more than £2.6 million.

Southampton's rise was linked to a relatively high share of council staff in AI- and data-related roles, alongside average Innovate UK support of about £330,000 per business. Bristol's stronger position reflected research funding, broadband infrastructure and a high concentration of AI-related businesses.

In Birmingham, the study highlighted the number of university courses referencing artificial intelligence, as well as growth in AI jobs and innovation activity. The city had the largest number of AI-related university courses among the locations assessed.

Manchester factors

In Manchester, several local initiatives illustrate the broader build-out around skills and commercialisation. A network of so-called MEGA hubs, developed through a collaboration between IN4 Group and the Greater Manchester Combined Authority, is intended to give more than 3,000 secondary school pupils access to technology learning and an AI Academy.

The programme follows an initial launch in Oldham and is due to extend across Rochdale, Salford, Tameside and Wigan. The region has also announced the Future of Work Alliance, a five-year initiative with a £5 million budget focused on digital transformation in large, data-intensive organisations.

The scheme includes research work, academic programmes, postgraduate internships and support for five AI-focused scholarships. The University of Manchester has also launched its Unit M Deep Tech Accelerator to help researchers and founders turn science and AI research into commercial businesses.

Manchester City Council has approved a budget of more than £1 billion, with spending intended to support infrastructure, development and longer-term growth. While that budget is not solely directed at AI, it forms part of the wider backdrop to the city's business expansion.

Broader picture

The ranking suggests the UK's AI activity is spreading beyond the capital rather than clustering in one dominant regional centre. Cities with strong universities, technology employers and access to innovation grants are strengthening their positions, while smaller urban economies are beginning to appear higher up the table.

The methodology drew on data from HESA, Indeed, UCAS, LinkedIn, the Office for National Statistics and Innovate UK. The local government measure counted council staff whose roles referenced AI, automation, digital transformation, data analysis or data science.

Cities were scored across weighted indicators to produce an overall AI-readiness result. The index did not include London, instead focusing on how other UK urban economies compare on talent, business activity and public support linked to AI.

Glyn Townsend, Senior Director of Education Services, Europe, the Middle East and Africa, at SAS, said: "Manchester's retention of the top spot for the third consecutive year is a testament to the strength of its AI ecosystem. Our previous research affirmed Manchester as a great place for AI businesses to plant their flags, but moving into 2026, it is clear that the city is actively working to grow its AI offerings and ensuring that future talent, as well as existing talent, is educated to a standard that will not only maintain but exceed what is already happening."

He also pointed to movement elsewhere in the rankings.

Townsend added: "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 Southampton and Derby, which have rapidly risen through the rankings, show that cities are embracing and harnessing AI, recognising how it can be used to boost jobs, increase opportunities and support long-term economic growth."

He said SAS was a founding partner in the UK Government's initiative to train 10 million workers with essential AI and tech skills over the next five years, as part of the Plan for Change and the forthcoming Industrial Strategy. SAS will provide businesses with free training materials and access to its AI experts.

Kanishka Narayan, AI Minister at the Department for Science, Innovation and Technology, said: "While congratulations are due for Manchester topping the table for the third year running, what this report really shows is how AI is creating opportunities for learning, growth and innovation right across the UK."

Narayan added: "We're mobilising the UK's businesses, innovators and 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."