UK firms boost AI investment & upskilling despite challenges

UK businesses are increasing investment in artificial intelligence and workforce development despite ongoing economic pressures and rising energy costs, according to new insights from the Barclays Business Prosperity Index.

The index, which analyses activity from over one million Barclays business clients alongside a survey of 1,000 business leaders, found that 42 per cent of companies plan to hire for AI-focused roles, with one in five already creating positions dedicated to AI. Firms are also set to raise investment by 5.5 per cent over the coming year, and 89 per cent of respondents remain confident in their own business prospects.

AI adoption

Nine in ten businesses (89 per cent) surveyed are aiming to use AI to address business challenges within the next two years. Improving data analysis and forecasting, enhancing customer experience, and reducing operational costs are the most frequently cited opportunities.

Over the past year, UK businesses have already invested an average of GBP £235,600 in AI and emerging technologies, with 68 per cent planning to increase this spending in the next 12 months. Larger firms, those with more than 250 employees, invested approximately GBP £400,000 on average, compared to GBP £225,500 among medium-sized enterprises and GBP £125,250 among small businesses.

AI is viewed as a priority investment by businesses, with 42 per cent planning to add AI roles to their workforce, and nearly a third either already recruiting or currently hiring for these positions. This focus on technology comes amid skills shortages, especially in fields such as financial services (52 per cent), information technology and telecoms (48 per cent), and the technology sector itself (51 per cent), where leaders highlight a need for AI and digital expertise.

Investment outlook

Company leaders expect overall investment to grow by 5.5 per cent over the next year, up from a 1.7 percentage point increase since the first quarter. Main areas for new investment include staff training and development (42 per cent), digital products (37 per cent), and research and development (37 per cent).

Data from Barclays indicates a cautious economic landscape. Cash inflows fell by 0.8 per cent year-on-year in the second quarter, with a slight decline in current account cash balances and a 3.3 per cent increase in overdraft usage. Lending to businesses decreased by 5.9 per cent on average, although companies have drawn GBP £9 billion from the Barclays Business Prosperity Fund in the first half of 2025.

Despite the intent to invest, 55 per cent of businesses are delaying major financial decisions until after the government's Autumn Budget, with 43 per cent expecting to ramp up investment following new fiscal measures - a figure that rises to 58 per cent among large businesses.

AI leadership and barriers

The survey found strong confidence in the potential for the UK to become a global AI leader; 72 per cent of business leaders expressed this view, with 19 per cent stating the UK already holds such a position. Among firms already using AI, 32 per cent have observed improved idea generation and innovation, 31 per cent noted better decision-making, while 30 per cent reported improvements to customer experience and reductions in operational costs.

Asked about how to strengthen the UK's position in AI, business leaders indicated the need for clear and supportive regulation (27 per cent), regional AI training centres (25 per cent), increased investment in AI research and startups (24 per cent), and stronger links between businesses and educational institutions (24 per cent).

Matt Hammerstein, Chief Executive of Barclays UK Corporate Banking, said: "It's encouraging to see an intent to invest from UK businesses, with many turning that into action. Against a backdrop of global uncertainty, there's more to do to build confidence in the UK as a place for businesses to grow and scale. "Our research suggests that AI is becoming a key tool to drive innovation, encourage investment and upskilling to lift productivity and build confidence in the UK as a global business hub."

Challenges and budget priorities

Inflation (33 per cent) and increased utility costs (22 per cent) were identified as the main barriers to business growth. Among the 55 per cent delaying investment, the most frequently postponed decisions include facility upgrades (37 per cent), product development (36 per cent), equipment purchases (35 per cent), and staff training (34 per cent).

Businesses are looking for support from the Autumn Budget, particularly in the form of tax cuts (45 per cent), which are especially valued by small and micro companies. Additional priorities include investment incentives (37 per cent), public infrastructure initiatives (36 per cent), and increased support for workforce upskilling (36 per cent).

Three-quarters (73 per cent) of firms believe business tax cuts would improve confidence, while significant numbers also favour incentives to invest (65 per cent), reduced regulatory burdens (63 per cent), and more funding for regional development (63 per cent).

Energy costs and resilience

Rising energy costs remain a challenge, with 84 per cent of businesses affected and 39 per cent adjusting their budgets in response. Many firms are investing in energy efficiency (42 per cent), switching to renewable sources (33 per cent), or passing higher costs onto their customers (26 per cent).

Abdul Qureshi, Managing Director of Barclays Business Banking, said: "Despite economic and energy challenges, UK businesses are pushing ahead with AI and skills investment to unlock productivity and growth. Firms are showing resilience by adapting quickly to new technologies and equipping their people with the tools they need to thrive."