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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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  • Jun 5, 2025
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Entrepreneurs Dominic Ponniah and Malcolm Hills, the CEO of office and commercial cleaning company Cleanology and the MD of Think FM respectively, have co-authored an open letter to PM Sir Keir Starmer, Deputy PM Angela Rayner and Business and Trade Secretary Jonathan Reynolds setting out strong opposition to key elements of the proposed Employment Rights Bill.


The co-authors are convinced that the controversial Bill will have a devastating impact on the FM sector – and their grave concerns have been backed by some of the biggest names in facilities management. Collectively the 128 signatory companies represent £7 billion in UK GDP and employ over 156,000 people.


The Bill proposes large-scale changes to employment law including making unfair dismissal a day one right, significantly increasing union powers and introducing statutory sick pay from day one.


In the letter, which Mr Ponniah has published on LinkedIn, he states:

“We are deeply concerned that some of the Bill’s provisions will have serious unintended consequences that could harm both good employers and the very employees that the Bill seeks to protect."

“Introducing day-one unfair dismissal rights will increase the legal and financial risk of taking on new hires and discourage employers from offering opportunities to individuals who need a first step, a second chance, or time to prove themselves – and further will discourage growth and reduce employment opportunities — especially in labour-intensive sectors like ours."


“Probationary periods are a vital part of responsible recruitment, allowing both parties to assess suitability before long-term commitments are made. This change will also encourage and increase the number of vexatious claims against employers, over-burdening an already overstretched tribunal system heavily weighted in favour of the employee."


“Meanwhile, introducing statutory sick pay from day one places a new, immediate cost on employers — especially in sectors like ours where staffing models are built around tight margins and stringent contracts. While we support fair and compassionate sick leave policies, the reality is that many SMEs simply cannot absorb this additional cost without significant impact."


“This additional burden will force some employers to reduce staff headcount or reduce their hours, turn down new contracts or even exit the market altogether. None of these outcomes will benefit our employees or our customers, many of whom are public services”.


Mr Ponniah stresses the letter – which can be read here – is ‘not party-political’. Most of the Government’s planned reforms to Employment Rights are expected to come in by next year, with other key reforms including curbing ‘zero hour’ contracts, clamping down on ‘fire and rehire’ and enhancing workplace protection.


Cleanology – headquartered in Vauxhall, South West London, and with regional offices in Manchester, Birmingham, Bristol and Scotland – runs campaigns throughout the year to raise funds and awareness for hygiene poverty and staff participate in fund-raising opportunities such as marathons.


The family owned and run company has been providing professional commercial & office cleaning services, property maintenance and support services to companies across the UK, for almost 25 years. Clients include blue-chip corporates, royal palaces and some of the world’s most famous brands.

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