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Barclays Research Expects Humanoid Robots To Fundamentally Reshape The Real Economy



In this year’s Equity Gilt Study, Barclays Research examines how physical AI will move beyond the digital realm and into the real economy, with humanoid robots set to reshape productivity, labour markets, geopolitics, and long-term asset returns.


While equities delivered strong real returns in 2025, the report argues that the more important shift is structural, marked by higher capital investment, rising productivity, and a repricing of growth, inflation, and capital across regions and asset classes. At the centre of this shift is the emergence of humanoid robots.

 

Ajay Rajadhyaksha, Global Chairman of Research commented:

“Humanoid robots represent the next frontier of AI, combining intelligence with physical capability. Their effect could extend well beyond technology, reshaping the structure of the global economy.”

Humanoid robots: the next frontier of automation

Automation is entering its third phase, according to Barclays Research analysts. Humanoid robots, enabled by advances in artificial intelligence, mobility, and battery systems, are designed to operate in human environments; use existing tools; and perform full jobs, rather than isolated tasks. As the costs of producing the robots decline and deployment accelerates, Barclays Research estimates the market for humanoids could reach $200 billion by 2035, reshaping labour supply, productivity, and investment opportunities across the global economy.

 

China leads in robotics

Barclays Research analysts find that China is already the centre of gravity for the global robotics economy. Supported by unmatched scale in manufacturing, deep supply chains, and state-backed industrial policy, China accounted for 85 percent of humanoid deployments in 2025 and controls many of the critical inputs needed to scale the technology. If current trends persist, Barclays Research estimates that robots could fill up to 60 percent of the workforce gap created by China’s aging population by 2035, helping sustain economic growth and reinforcing robotics as a key pillar of its economic and geopolitical strength.

 

How robotics will rewire economies

Automation has long supported productivity growth, but its effect has largely been limited to specific tasks. Barclays Research analysts argue that humanoid robots extend automation not just to entire roles, but to those that until now could not be automated.


Historically, strong productivity gains in sectors such as manufacturing coincided with a declining share of GDP, while more labour-intensive sectors expanded, a pattern known as the Baumol effect. By increasing the substitutability between labour and capital in tasks that have resisted automation, humanoids could ease these constraints and help shift that dynamic. Barclays Research also notes that more than 60 percent of employment in 2018 was in roles that did not exist in 1940, suggesting humanoids are likely to reshape, rather than reduce, the future of work.

 

Will physical AI’s displacement effects hurt asset prices?

Barclays Research analysts argue that physical AI is not a zero-sum shock and that markets may be underestimating its positive effect. By expanding the production frontier, rather than simply redistributing income, humanoid robots strengthen the case for higher productivity, higher equilibrium real rates, stronger earnings growth, and improved long-term asset returns. While adoption will reshape labour income and shift sectoral winners and losers, the overall effect is likely to be positive for growth and markets.

 

Barclays Equity Gilt Study is a flagship annual publication that combines market-leading macro analysis with a unique multi-asset dataset spanning over 100 years. It provides uniquely rich data and commentary on long-term asset returns in the UK and US. Data for the UK goes back to 1899, while the US data, provided by the Center for Research in Security Prices at the University of Chicago, runs from 1925.



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  • Apr 10, 2025
  • 2 min read

Today, Andrew Griffith MP, Shadow Secretary of State for Business and Trade, has launched the latest phase of the Conservative Party’s Policy Renewal Programme.


It will be a bold new initiative to shape the policies of the future using the experience of private sector leaders, industry titans and businesses large and small. As a former FTSE100 CFO himself, he plans to place frontline experience and industry insight at the heart of the strategy.


This is a revolutionary policy agenda that aims to reflect the practical realities of the business world rather than the Whitehall knows best approach that has failed Britain's businesses.


Building on this wealth of business experience will ensure the state becomes more efficient, more focused and, most importantly, more effective. Griffith will lead a deep review of the problems this country’s businesses are facing, ask important questions about what is holding business back and seek opportunities to champion entrepreneurship and unleash businesses full potential to boost UK PLC.


He has already been out and around the country meeting with industry magnates as well as small businesses who are the backbone of Britain’s economy. But there is more to do. This business policy drive will form a centrepiece of the Conservative Party’s business offer at the next election.


It is set to be the biggest review and engagement process in a generation. The business agenda is just one strand of a wider Conservative policy overhaul as the Party prepares for the next general election.


Andrew Griffith MP, Shadow Business Secretary, said: “Britain’s businesses have been hammered by a punishing Labour government, which has trash talked the economy, hiked taxes to record highs and drowned businesses in reams of red tape."


“I have been meeting with businesses large and small across the country, and they are crying out for a low-tax, lighter-touch regulation, more business-oriented policy platform. That is what the Conservative Party - under new leadership - will offer."


"We will always back the wealth creators, the entrepreneurs and the risk takers who power our economy."

“So, I am bringing British business leaders into the heart of this policy renewal programme and if you want to play your part, I want to hear from you. The Conservatives are open for business."

Please visit their website here to contribute to the policy renewal.


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