87% of UK manufacturers now use automation, Barclays finds

What the Barclays survey found

Barclays published research on 17 September 2026 based on a survey of UK manufacturing leaders. The headline figure is that 87 per cent are using automation of robotics, operations and storage to manage disruption and demand volatility. That is a striking number because it suggests automation is no longer a project for the largest plants or the most technically advanced firms. It has become a mainstream response to unpredictable order patterns, labour availability and the need to keep lines running when supply chains shift. The survey also found that 94 per cent expect their business to prosper over the next 12 months, which is a high level of confidence against a backdrop of volatile input costs and changing customer demand.

The planning horizon has stretched. Barclays found that 76 per cent are planning major investment, sourcing and supply-chain decisions further ahead than 12 months ago. That matters because longer planning cycles usually require firmer assumptions about cash flow, energy prices and customer contracts. Manufacturers also expect spending to rise by an average of 32 per cent over the next 12 months. Future investment is focused on agentic AI, cybersecurity and logistics automation. Those three areas point to a common theme: firms are trying to remove manual bottlenecks, protect themselves from digital disruption and move goods more predictably. The survey is Barclays' own research, and Barclays lends to manufacturers. That relationship is worth stating plainly when reading the findings.

Energy costs are the brake on investment

The confidence in the survey is not unqualified. Barclays found that 89 per cent say energy costs are constraining growth or investment to some extent. That is close to a universal constraint. For a small manufacturer, energy is not just a line in the profit and loss account. It affects the viability of running a second shift, the payback period on a new machine, and the price that can be quoted for a contract that runs for 12 months or more. When 89 per cent report some degree of constraint, it suggests that energy is shaping decisions even where firms are still investing. The constraint may be mild for some and severe for others, but it is present across almost the whole sample.

The practical effect on a small manufacturer's budget is that energy becomes a fixed cost that is hard to hedge and hard to pass on. A bakery, a metal fabricator or a packaging business may find that a new piece of automation equipment has a strong labour-saving case but a weaker case once the additional electricity load is priced in. The same logic applies to extending premises or adding cold storage. Business energy guidance becomes part of investment appraisal rather than a separate administrative task. Firms that review contract terms, standing charges and half-hourly consumption data before committing to new equipment are effectively treating energy as a design constraint. The survey does not say that energy costs are stopping all investment, but it does say that 89 per cent feel some constraint, which is a meaningful brake on the pace of change.

Big firms borrow, small firms build buffers

Barclays also analysed anonymised client data from around 30,000 manufacturers. The pattern for small and medium-sized firms differs from that of larger firms. SME manufacturers in Barclays Business Banking saw cash inflows up 1.4 per cent, average loan balances down 17.7 per cent while the number of loans rose 1.1 per cent, and savings balances up 1.1 per cent. That combination suggests SMEs are paying down existing debt, taking on more but smaller facilities, and holding slightly more cash. It is a defensive posture. A small manufacturer that reduces its average loan balance while increasing the number of loans may be refinancing into smaller, more flexible arrangements, or using short-term facilities for working capital rather than committing to large long-term debt.

Larger firms increased longer-term borrowing. That is the opposite approach. Longer-term borrowing is typically used for capital projects, site expansion or major equipment programmes where the payback period extends beyond a single financial year. The divergence makes sense in the context of the survey. Larger firms have more capacity to absorb energy cost volatility, more bargaining power with lenders and more certainty about future order books. SMEs, by contrast, are building buffers. Tom Horton, head of manufacturing at Barclays UK Corporate Bank, said businesses are responding by looking further ahead, investing with greater certainty and building more resilient operating models. The client data shows that resilience is being financed in different ways depending on size. The survey is Barclays' own research, and Barclays lends to manufacturers, so the lending data comes from a bank with a commercial interest in the sector.

Defence and public-sector demand

Two figures in the survey point to a shift in customer mix. Barclays found that 72 per cent report increased demand from public-sector, security and defence customers, and 77 per cent view working with the defence sector more positively than a year ago. That is a significant change in sentiment. For manufacturers with transferable skills in precision engineering, electronics, textiles or logistics, defence and security work can offer longer contracts and more predictable payment terms than some commercial markets. The increase in demand is reported by nearly three quarters of the sample, which suggests it is not confined to specialist defence primes.

The change in attitude is also notable. A year ago, 77 per cent would not necessarily have viewed defence work more positively. The shift may reflect a broader reassessment of supply-chain security, public-sector procurement reform and the willingness of buyers to bring more work to domestic manufacturers. For a small manufacturer, the practical question is whether existing capabilities can be adapted to defence or public-sector specifications, and whether the accreditation and compliance burden is manageable. The survey does not set out which sub-sectors are seeing the strongest demand, but the combination of 72 per cent reporting increased demand and 77 per cent viewing the sector more positively suggests that defence and public-sector work is becoming a more mainstream part of the order book. That has implications for investment in quality systems, cybersecurity and traceability, which are already listed among the priority areas for future spending.

What it means for small manufacturers

For a small manufacturer reading the survey, the practical reading is that peers are investing, but they are doing so with energy costs and financing costs in mind. The 87 per cent automation figure suggests that automation is now a baseline expectation rather than a differentiator. The 89 per cent energy constraint figure suggests that any automation business case should include a realistic assessment of additional electricity load and the terms of the existing energy contract. The 76 per cent planning further ahead suggests that suppliers and customers are increasingly looking for commitments beyond 12 months, which places a premium on cash-flow forecasting and contract pricing. The 32 per cent expected spending increase suggests that budgets are expanding, but the SME lending data shows that smaller firms are funding more of that from cash flow and smaller facilities rather than large long-term debt.

On finance, the survey points to a split between SMEs building buffers and larger firms borrowing long term. A small manufacturer considering automation, energy efficiency or logistics investment may find that lenders are willing to provide facilities, but the terms and the size of the facility may differ from what a larger competitor can access. Automation grants and loans may be available through various schemes, and the survey does not assess their take-up. Energy contracts are a separate negotiation, and the 89 per cent constraint figure suggests that contract timing and renewal terms deserve attention alongside equipment decisions. The survey is Barclays' own research, and Barclays lends to manufacturers. The findings describe what manufacturers say and what Barclays client data shows, not what any individual business should do. The clearest signal is that confidence and constraint are running in parallel, and that planning further ahead is the common response.

Source: Barclays Business Prosperity Index release.

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Frequently asked questions

What percentage of UK manufacturers use automation according to the Barclays survey?

87 per cent are using automation of robotics, operations and storage to manage disruption and demand volatility.

How many manufacturers expect their business to prosper over the next 12 months?

94 per cent expect their business to prosper over the next 12 months.

What percentage say energy costs are constraining growth or investment?

89 per cent say energy costs are constraining growth or investment to some extent.

How much do manufacturers expect spending to rise over the next 12 months?

Manufacturers expect spending to rise by an average of 32 per cent over the next 12 months.

What does the Barclays client data show for SME manufacturers?

SME manufacturers in Barclays Business Banking saw cash inflows up 1.4 per cent, average loan balances down 17.7 per cent while the number of loans rose 1.1 per cent, and savings balances up 1.1 per cent. Larger firms increased longer-term borrowing.