Almost nine in 10 UK manufacturers are using automation of robotics, operations and storage to manage business disruption and demand volatility, according to research from Barclays.

The bank’s Business Prosperity Index found 87 per cent of manufacturing leaders surveyed said automation was helping them, while 94 per cent expected their business to prosper over the next 12 months.

The confidence comes despite cost pressure. Almost nine in 10 (89 per cent) said energy costs were constraining growth or investment to some extent, according to the survey.

Barclays said businesses were responding by investing in automation, planning further ahead and pursuing work in defence, national security and critical infrastructure.

Barclays’ anonymised client data from around 30,000 UK manufacturing businesses, comparing the second quarter of 2026 with the same period of 2025, points to a split between larger companies and smaller ones.

Among larger manufacturers served by Barclays UK Corporate Bank, cash inflows fell 3.5 per cent year on year while loan balances rose 12.8 per cent. The bank said this suggested those businesses were continuing to invest despite softer trading conditions.

SME manufacturers served by Barclays Business Banking recorded a 1.4 per cent increase in cash inflows. Their average loan balances fell 17.7 per cent, even though the number of loans rose 1.1 per cent, and savings balances also rose 1.1 per cent. Barclays said this suggested smaller firms were prioritising financial flexibility.

Across the survey, more than three quarters (76 per cent) of manufacturers said they were planning major investment, sourcing and supply-chain decisions further ahead than a year ago. Respondents expected to increase spending by an average of 32 per cent over the next 12 months, and two thirds (66 per cent) had borrowed to fund investment over the past year.

Manufacturers reported benefits from automation including improved order fulfilment and delivery performance (23 per cent), better forecasting and decision-making through data insights (23 per cent) and stronger supply chain resilience (22 per cent). The findings follow reporting on why manufacturing SMEs are turning to automation to address skills shortages.

Over the next three to five years, 27 per cent plan to invest in agentic AI or AI-driven planning, forecasting and decision-making systems, 25 per cent in cybersecurity and operational resilience technologies, and 22 per cent in logistics automation.

On storage, 13 per cent have increased on-site storage or are holding additional buffer stock, and 10 per cent are expanding storage capacity. Growth in production volumes was the most cited driver of extra storage needs (22 per cent), followed by geopolitical supply-chain uncertainty and increased customer stockpiling (both 19 per cent).

Tom Horton, head of manufacturing at Barclays UK Corporate Bank, said: “Despite continued pressure from energy costs and a more uncertain global environment, businesses are responding by looking further ahead, investing with greater certainty and building more resilient operating models.”

He added: “From advanced manufacturing and AI-enabled operations to defence supply chains and national infrastructure projects, businesses are positioning themselves to capitalise on long-term growth markets.”

More than three quarters (77 per cent) of manufacturers surveyed view working with the defence sector more positively than 12 months ago, and 72 per cent reported increased demand from defence and security customers. The government’s Defence Industrial Strategy 2025 set out plans to raise defence spending to 2.6 per cent of GDP by 2027.

According to Barclays, 27 per cent plan to develop or sell defence-related products over the next three to five years, with the same proportion targeting dual-use products with civilian and military applications. Some 81 per cent said they had made changes to support defence, national security and critical infrastructure work, including planned investment in physical security upgrades (66 per cent) and security clearances and specialist recruitment (63 per cent). The Ministry of Defence has separately set up a unit to give small defence firms easier access to contracts.

Sarah Collins, head of SME industries at Barclays Business Banking, said: “For smaller businesses in particular, balancing investment with day-to-day resilience remains a priority.”

Barclays said its £22bn Business Prosperity Fund is available to provide lending and refinancing to eligible Business Banking and UK Corporate Banking clients.

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