11-12-2025 
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U.K. business leaders say that the U.K.’s manufacturing potential is strong but that investment into technology adoption and digital skills is required to stave off decline, according to a new report by Barclays Bank (NASDAQ: BCS) and The Manufacturer.
The report, titled “Mind the Gap: Closing the productivity divide in UK manufacturing,” was released last week and is based on surveys and interviews with more than 100 U.K. manufacturers.
It paints a cautiously optimistic vision on the part of the country’s manufacturing leaders, who largely seem to agree that while U.K. manufacturing productivity has been in decline, there is a path forward and many manufacturers are already making strides.
First, the bad: the latest figures from the U.K.’s Office for National Statistics (ONS) show that the U.K.’s productivity in terms of output per hour is 10% below the G7 average. Traditional manufacturing powerhouse Germany comes in at a full 16% more productive than the U.K.
The attitudes of industry leaders surveyed by the report align with this data. More than half (56.4%) believe that U.K. manufacturing productivity is in decline, with 19% saying they were unsure.
The most-cited cause for the slippage was ‘skills and workforce challenges’ (56.5%), followed by ‘slow technology adoption’ (40%) and ‘supply chain inefficiencies’ (31.3%). Just 10% cited ‘regulations.’
According to those interviewed, a lack of digital skills plays a role in the workforce challenges; still, the primary concern relates more to an inability to find workers who are willing to work in manufacturing.
However, as the second-most cited cause for the productivity gap, the sluggish adoption of technology remains on manufacturers’ minds. The report says that cost factors are the biggest barrier to adoption for smaller companies, with one quoted CEO observing that these firms lack the ‘financial headroom to trial new systems without guaranteed ROI.’
But the CEO of a large engineering business laments the U.K.’s cultural and policy environment as having held the U.K. back in this regard: “We should have adopted technology 15 years ago. It would have transformed our productivity.”
If not diametrically opposed, the differences between the two quotes do illustrate that there’s a divide within the industry between those who have embraced technology and those who have left it alone.“Some manufacturers have embraced digital transformation and use integrated platforms to drive decision-making, while others are operating within fragmented systems or even manual record-keeping,” says the report.
“This disparity directly affects the ability to spot inefficiencies and respond in real-time.”
The point about the need for technology adoption is backed up in some covert and amusing ways elsewhere in the report. One of the more interesting factors highlighted by the research is that there’s no consistent, widely accepted definition of what constitutes ‘manufacturing productivity,’ which makes benchmarking difficult. In other words, the data isn’t good enough.
Fortunately, the research indicates that manufacturers are aware of the issue. Almost half (49.6%) of respondents reported plans to increase their digital transformation efforts within the next 12 months. It’s the most commonly cited top priority among respondents.
The next-highest priority is related but distinct: staffing. 45% say that upskilling/reskilling is a top priority in the next year. This is closely followed by ‘supply chain optimisation’ (29%) and ‘enhanced data management’ (26%).
All in all, the research represents a mixed bag for the U.K.’s manufacturing sector. The report concludes:
“The direction of travel is positive: manufacturers are investing, innovating and building momentum. Yet the challenge cannot be underestimated. Without continued focus on skills, technology adoption and process efficiency, the UK risks losing pace with global competitors.”
Read the report in full here.
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