Barclays Research Expects Humanoid Robots To Fundamentally Reshape The Real Economy

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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
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New analysis by the animal welfare charity, Naturewatch Foundation, has found that the majority of dogs and puppies in the UK still come from unknown sources, including unlicensed breeders, illegal breeders and other supply routes, such as puppy smuggling. The charity says stricter oversight of the puppy trade is urgently needed.

At the end of last year, Naturewatch Foundation submitted freedom of information requests to 391 councils across the UK and Ireland to update its Dog Breeding Map of the UK and Ireland - a unique tool that helps prospective puppy buyers find out about dog breeding in their area.

The findings reveal that there are 2,897 licensed breeders across the UK and Ireland, collectively keeping around 26,000 female adult dogs for breeding – of which just over 23,000 are kept in the UK. With around one million dogs and puppies joining UK households each year, Naturewatch Foundation estimates that only 15-20%* come from licensed breeders. Around 6%** of dogs and puppies are imported commercially, with the rest coming from unknown, unlicensed or potentially illegal sources.

Natalie Harney from Naturewatch Foundation said, “Dog lovers will be shocked to learn that most UK dogs and puppies still come from unknown sources. Despite reforms in dog breeding regulations over the past decade, loopholes and underenforcement remain major issues. Plus, with rules varying across nations, it can be difficult for the public to know when a breeder should be licensed. These issues require urgent attention from regulators."

“We strongly encourage anyone thinking about getting a dog or puppy to adopt from a reputable rescue, where many wonderful animals are waiting for their second chance. If rehoming isn’t an option, though, it’s vital to make sure you know your breeder. Ask: Are they licensed? How many dogs are they allowed to keep? Are they happy for you to visit, meet their dogs and see their premises? These are essential questions any prospective puppy buyer should ask. Make sure you check out the Dog Breeding Map of the UK and Ireland during your research.”

The investigation also found that just 34% of local councils could confirm exactly how many dogs the breeders they’d licensed were permitted to keep. Many councils were unable to confirm details such as the number of male dogs, litters of puppies or ‘other’ dogs (such as retired dogs and pet dogs) permitted in their area.

Whilst Naturewatch Foundation’s investigation found the majority of licensed breeders are registered to keep 10 breeding adult dogs or fewer, some are allowed to operate on an industrial scale. In Ireland, four licences allow over 200 adult breeding dogs. Three of those are licensed by Fermanagh and Omagh District Council, with one single premises licensed to keep a staggering 250 female dogs and 100 male dogs for breeding.

Naturewatch Foundation wants to see improvements to dog breeding regulation across the UK and Ireland, increased transparency and improved enforcement arrangements to better protect dogs used for breeding, their puppies and the public.

Anyone concerned about illegal dog breeding near them should report their concerns to their local council. Reports can also be submitted to Naturewatch Foundation’s Hotline4Pets.

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Barclays Research Expects Humanoid Robots To Fundamentally Reshape The Real Economy

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