AI spending on hold at UK businesses until the Budget
Key Points
- 64% of UK businesses are delaying investment until after the Budget, up from 55% last year
- Technology, AI and automation top the list of post-Budget investment priorities at 37%
- Economic uncertainty and high energy costs are the biggest barriers, each cited by 34%
- Over eight in 10 firms would invest more with a clearer long-term policy framework
- 30% of consumers are cutting discretionary spending and 27% are delaying major purchases
Barclays research shows 64% of UK businesses are delaying investment decisions until after the Budget.
The bank’s latest Business Prosperity research found that technology, AI and automation would gain the most when those firms commit, with 37% of businesses naming them as their top investment priority.
Workforce training and skills followed at 31%, while 30% of businesses pointed to new products and services.
Businesses also listed machinery, equipment and cybersecurity among their priorities for spending after the Budget.
The share of firms holding back on investment rose from 55% ahead of last year’s fiscal event, Barclays said.
Among businesses delaying investment, 34% cited uncertainty about UK economic growth and the same share pointed to high energy costs.
A further 29% blamed future tax policy, and 26% pointed to the Government’s spending priorities.
Lower business taxes topped the list of measures firms said would help, with 39% of businesses and 47% of microbusinesses picking them.
More than eight in 10 businesses said they would likely increase investment if the Government provided a clearer long-term economic policy framework.
“This is not a shortage of confidence, ambition or ideas,” said Matt Hammerstein, Chief Executive of Barclays UK Corporate Bank.
Hammerstein said businesses already know where capital can make a practical difference, including better technology, a more skilled workforce and new products and services.
Barclays’ anonymised client data showed lending values at its UK Corporate Bank up 9.3% year on year, as clients increased their longer-term borrowing.
In the bank’s Q2 Business Prosperity Index, 56% of businesses said they planned to increase investment over the following year.
Half of businesses told Barclays they feel more confident in their regional economy than a year ago, rising to 57% among medium-sized firms and 58% among large firms.
UK consumers are holding back too, with 68% concerned about the Budget’s impact on their household finances.
Barclays found that 30% of consumers are reducing discretionary spending ahead of the Budget, while 27% are delaying major purchases.
Despite those concerns, 61% of consumers said they remain confident in their own financial decisions.
“Greater certainty beyond the immediate fiscal moment will be vital if this pause is not to become a recurring feature of business planning,” said Hammerstein.
