In 2025, productivity is at the forefront of thinking for the UK’s leaders in business and in government.
Earlier this year, Chancellor Rachel Reeves used her Spring Statement to commit £3.25 billion to public service reform, with the use of artificial intelligence (AI) and technological improvement planned to be front and centre in the government’s efforts to boost productivity, modernise operations, and support long-term economic growth.
The role of AI is growing at a furious rate. London-based AI start-ups raised a record $3.5 billion (£2.9 billion) in venture capital investment last year. Its power and scope seem almost limitless, and that is perhaps why so many business leaders are looking to it as they strive for efficiencies and to improve productivity.
But, normally, when discussions around striving for efficiencies begin, the inclination is to imagine that a drop in headcount and technology replacing people will follow next.
However, according to Barclays’ Business Prosperity Research, while business leaders are very focused on productivity and are looking to AI’s power, they aren’t looking for the technology to replace their employees, but enhance them…
Productivity is a key focus
At the end of 2024, when asked about their priorities for 2025, findings from Barclays’ Business Prosperity Index which surveys 1,000 UK business leaders, a majority named driving increased productivity as a key priority.
Of those surveyed in January of this year, 54% named improving productivity as more important to them now compared to the same moment at the end of 2023, with 40% saying it was equally as important.
And, in a survey conducted last month, that notion has held strong. In research conducted between May 12-22, 89% per cent of respondents said that they are planning to take steps to improve the productivity of their workforce, and 46% said that a drive for productivity is now more important than it was a year ago.
Looking inwards
This increased drive for productivity comes amid a backdrop of 72% of businesses revealing that they are finding difficulties in hiring skilled labour, which they attribute to holding back growth. Instead, many leaders are now looking inwards, with 34% planning to upskill employees through training and 32% targeting improving efficiencies.
Speaking about this, Hannah Bernard, Head of Barclays Business Banking, said: “Productivity gains are seen as vital to help offset the increasing cost pressures on businesses. The focus on upskilling staff through training and development is a positive way for firms to combat skilled labour challenges, alongside efficiencies from digital transformation through emerging technologies such as AI.”
Business is looking to AI but not to slash numbers
In research recorded at the start of the year, and before the announcement of US tariffs, 33 per cent of leaders spoke of their hopes that AI will improve their productivity by streamlining processes and by reducing manual tasks.
For many, in business and in society more generally, this is the great hope for artificial intelligence, that it reduces manual, repetitive tasks and allows more time for creative and high-value tasks.
This mirrors Barclays’ own approach to AI. The business has been using analytical AI to help manage fraud and money laundering risks, with the technology allowing us to read patterns of behaviour that produce warnings. With generative AI, this can then be taken a step further, by allowing the technology to learn the patterns of a store of data and generate something new, a responsive chatbot for example.
This, in turn, will assist customer service agents, who will be able to consult a vast bank of data to answer a specific question that previously might have taken hours to solve. For Barclays, and for business more widely, the hope is that AI can increasingly allow employees, particularly customer service, to free up their time and deal with more customers.
As shown in survey data from the start of 2025, most employers said they were thinking along the same lines. They were looking for solutions to improve staff retention, rather than to slash numbers, with 70% of leaders planning to increase headcount or backfill roles over the course of 2025 and 92% saying that are building strategies to improve their retention rate.
Newer survey data from last month shows the same trend continuing. Nearly half of businesses (46%) are planning to invest in staff training and development, with 39% prioritising innovation and new product development and 35% looking to invest in digital transformation. Digital transformation and staff training and developments are processes you would fully expect how to use AI to be part of.
“Productivity gains are seen as vital to help offset the increasing cost pressures on businesses. The focus on upskilling staff through training and development is a positive way for firms to combat skilled labour challenges, alongside efficiencies from digital transformation through emerging technologies such as AI.”
Hannah Bernard, Head of Barclays Business Banking
Enhancing, not replacing…
Rich Robinson, Head of Hospitality & Leisure at Barclays UK Corporate Bank recently wrote that “…. the term AI can sometimes conjure up images of technology and robots replacing the workforce, however in reality, it’s far from being a replacement for people and instead can be used as a tool to enhance the capabilities of the personnel within companies and optimising the customer experience.”
It will be fascinating to see in the months ahead how business continues to embrace the power of AI and where the success stories will be found.
To find out more about the Barclays' Business Prosperity Index, the Business Prosperity Fund and how it supports UK business investment, visit our dedicated page.
More from our UK unlocked series
Our expert insights on the economic and business issues most critical to the UK's companies and policy leaders.
