UK manufacturers are increasing automation and extending their planning horizons as high energy costs, geopolitical disruption, and uneven access to investment capital reshape operating decisions across the sector.
Research from Barclays found that 87% of manufacturing decision-makers are using automation across robotics, operations, or storage to manage disruption and fluctuations in demand, while 94% remain confident about their own business prospects over the next 12 months.
That confidence sits alongside persistent cost pressure. Some 89% said energy costs were constraining growth or investment to at least some extent, and 76% are now planning major investment, sourcing, and supply chain decisions further ahead than they were a year ago.
The survey suggests planned spending could remain substantial despite those constraints. Respondents expect to increase investment by an average of 32% over the coming year, while 66% said they had borrowed to fund investment during the previous 12 months.
The research was conducted by Censuswide among 504 manufacturing decision-makers between 14 and 24 August, covering sectors including aerospace and defence, automotive, engineering, industrial equipment, electronics, chemicals, food and drink, construction materials, consumer goods, and energy.
Barclays supplemented the survey with anonymised client data covering around 30,000 UK manufacturing businesses, providing a separate view of how financing and cash flows are developing across different company sizes.
Among larger manufacturers served by Barclays UK Corporate Bank, cash inflows fell 3.5% year on year in the second quarter, while loan balances increased 12.8%. Among SME manufacturing customers, cash inflows increased 1.4%, but average loan balances fell 17.7%, despite the number of loans increasing 1.1%. Savings balances among those smaller manufacturers also increased 1.1%.
The divergence suggests larger businesses are taking on more capital to sustain investment programmes while smaller manufacturers are keeping greater financial flexibility and borrowing smaller average amounts. Headline confidence measures therefore conceal markedly different balance-sheet behaviour depending on company size.
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.”
Automation is one of the principal areas where manufacturers remain prepared to commit capital. Respondents cited improved order fulfilment and delivery performance, better forecasting through data, and stronger supply chain resilience among the benefits already being achieved.
Investment priorities are also extending beyond conventional factory automation. Over the next three to five years, 27% of respondents plan to invest in agentic AI or AI-driven planning, forecasting, and decision-making systems. A quarter plan cybersecurity and operational-resilience investment, while 22% are targeting logistics automation.
Those plans come as manufacturing cost pressure is rebuilding. UK producer-price data for August showed materials and fuels bought by manufacturers costing 6.1% more than a year earlier, while factory-gate prices rose 3.7%. Energy and petroleum-related inputs have been among the sharper sources of pressure.
Demand conditions have been less uniformly negative. Manufacturing order books improved during August, according to the CBI’s Industrial Trends Survey, although production remained weak. The combination leaves manufacturers deciding how far to invest ahead of a recovery while protecting cash against continued volatility.
Defence and critical infrastructure are becoming part of that calculation. Barclays found 72% of surveyed manufacturers had experienced increased demand from defence and security customers, while 77% viewed working with the defence sector more positively than a year ago. More than a quarter plan to develop defence-related products during the next three to five years, with the same proportion targeting dual-use products.
That shift requires more than production capacity. Companies entering security-sensitive markets can face additional spending on physical security, cyber controls, specialist recruitment, certification, and staff clearances. Eighty-one per cent of respondents said they had already made changes to support defence, national security, or critical-infrastructure work.
Inventory strategy is changing as well. Thirteen per cent have increased on-site storage or are holding additional buffer stock, while 10% are expanding storage capacity. Production growth was the most commonly cited reason, followed by geopolitical supply chain uncertainty and increased stockholding by customers.
The data depicts a manufacturing sector that is not responding to uncertainty simply by freezing investment. Larger businesses in particular appear to be using borrowing and automation to maintain capacity and resilience, while smaller companies are displaying greater caution over the size of their commitments.
Whether current spending intentions convert into sustained productivity gains will depend on demand, energy prices, financing conditions, and companies’ ability to integrate new technology into existing operations. Automation is nevertheless becoming an increasingly immediate response to volatility rather than solely a long-term productivity programme.
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