Businesses accelerate cyber and AI investment amidst geopolitical tensions

More than half of UK businesses plan to increase investment in AI over the next year, according to a Barclays survey of 900,000 firms.

The report found that 68% of companies plan to invest in cybersecurity, while 54% expect overall investment to grow. Six in ten firms are already using AI agents to improve productivity and allow staff to focus on higher-value tasks, although one fifth may pause investment because of the conflict in the Middle East.

More than four in five UK businesses (81 per cent) expect revenues to increase next quarter and 83 per cent are confident in their prospects over the next year.

SMEs within Barclays Business Bank saw a modest uptick in cash inflows (+0.2 per cent), continuing to build savings buffers (+1.5 per cent) and cut borrowing (‑13.1 per cent)

Larger corporates within Barclays UK Corporate Bank saw a reduction in cash entering (-7.0 per cent) and leaving businesses (-6.1 per cent) as they reduced savings (-5.2 per cent). These larger firms have simultaneously increased longer term borrowing (+6.9 per cent) and reduced shorter-term overdraft borrowing (-11.8 per cent), suggesting future investment plans remain intact

Businesses of all sizes are split on their pricing strategy in response to rising costs, with 37 per cent passing them on to customers and 32 per cent absorbing the impact within margins.

Matt Hammerstein, CEO of Barclays UK Corporate Bank, said “UK businesses are now operating in an environment where uncertainty has become the norm. Geopolitical instability and persistently high costs are feeding directly into cashflows, borrowing decisions and investment plans.

“What’s striking, however, is how businesses are responding. Rather than pulling back entirely, many are adapting to this new reality by tightening financial discipline, managing cash carefully and prioritising investment where it strengthens resilience, productivity and long-term competitiveness.”

Resilience is now a key focus, with recent global turmoil putting cybersecurity at the forefront of many businesses’ priorities, with fewer than three in 10 (29 per cent) confident in their ability to respond to a major cyber incident. In response, almost seven in 10 (68 per cent) are planning to increase their cybersecurity investment over the next 12 months.

However, businesses are seeking to find a balance between adoption and exposure. While 82 per cent are confident that their cybersecurity capabilities are keeping pace, almost half (46 per cent) are concerned that these technologies are increasing their exposure to cybersecurity risks.

As technologies develop at pace, large businesses are eager to increase their investment, while micro businesses are adapting more slowly. More than one third (36 per cent) of large firms have increased cybersecurity investment since the start of 2026, falling to 26 per cent of smaller businesses and 4 per cent of micro businesses. With additional finance, large firms say they would prioritise further cyber security (24 per cent) alongside AI investment (24 per cent).

The average amount decision makers have spent on cybersecurity to date in 2026 is £505,000. This rises significantly to £1.3million for large businesses, but falls to £134,000 for small businesses and £15,000 for micros.

Alongside rising cyber investment, businesses are doubling down on AI and automation to improve efficiency and offset cost pressures.

More than half of businesses (52 per cent) believe AI and automation has improved their productivity, with employees now spending less time on administrative tasks (38 per cent), becoming faster at decision-making (34 per cent) and spending more time on higher value work (31 per cent). The way businesses are using AI has evolved too, with six in 10 (61 per cent) now using agentic AI to some extent in their operations.

Abdul Qureshi, Head of Barclays Business Banking said “SMEs are navigating higher costs and ongoing uncertainty, which continues to weigh on day-to-day decisions. While larger firms push ahead with longer-term borrowing, many smaller businesses are focused on building cash buffers and closely managing their financial position. At the same time, AI is starting to present tangible opportunities for SMEs, particularly where it can help improve productivity and make everyday tasks more efficient.”