UK innovation firms plan to scale at home despite procurement delays slowing routes to revenue

• 56 per cent of UK innovation firms are planning next major phase of growth in the UK
• 71 per cent are upbeat about their own business prospects
• Computer hardware and defence-focused firms report highest increase in cash inflows into Barclays accounts amongst Tech and Innovation businesses
• This is despite sales being slowed by delays, with 54 per cent citing longer procurement timelines and 56 per cent experiencing legal, compliance and security barriers
• Meanwhile 90 per cent say the UK and its allies must build stronger space capability to remain globally competitive

UK technology and innovation businesses are accelerating infrastructure investment and scaling efforts, but slower routes to revenue are beginning to emerge, according to new Barclays Business Prosperity Index research ¹ among 501 UK tech and innovation firms.

UK growth ambition is strong but procurement bottlenecks emerge

Business leader confidence in the UK innovation economy is high. Seven in 10 (71 per cent) are upbeat about their business prospects over the next year, with over half (56 per cent) planning their next major phase of growth in the UK.

This ambition is translating into significant planned investment, with the vast majority (97 per cent) expecting to increase spending on compute, cloud or data infrastructure over the next year, and almost seven in 10 (69 per cent) anticipating increasing investment by at least 20 per cent.

Looking further ahead, nearly half (49 per cent) expect the UK to strengthen its position most as a global innovation hub over the next decade, although others believe the US (20 per cent) or China (11 per cent) will strengthen their position more.

Despite this confidence, half (50 per cent) report customers pausing or delaying spending leading to less predictable routes to revenue. More than half (54 per cent) say procurement timelines have worsened over the past two years, with a similar number (52 per cent) pointing to longer pilots and proof-of-concept requirements.

A lack of transparency in public sector procurement (28 per cent) is cited as a key challenge, with limited visibility over contract timing and pipeline making it harder for financial services providers to lend against future revenues.

Helena Sans, Head of Innovation Banking at Barclays UK Corporate Bank, said: “It’s encouraging that UK innovation businesses remain ambitious to scale within their home market. The UK has strong foundations to support that growth, from world-class research and talent to deep sector and investor ecosystems, with a clear opportunity to help more firms grow and retain value in the UK.

“But as firms move from early growth to scale, access to finance is increasingly linked to visibility of future revenues. Where procurement timelines are unclear and pipeline visibility is limited, it becomes harder to lend against that future income, making greater transparency, particularly in public sector pipelines, critical to unlocking growth.”

Defence demand rises

As pressures build, demand is shifting across the innovation economy.

Barclays’ anonymised client data from around 26,000 UK innovation businesses, comparing Q1 2026 to Q1 2025, shows how performance is diverging across the sector.

• Cash inflows into innovation business accounts declined by 4.9 per cent year-on-year
• However, inbound international payments to innovation Business Banking SMEs rose 2.0 per cent in contrast to a 1.8 per cent decline across all Business Banking SMEs. This suggests an uplift in inward investment and international sales for innovation SMEs.
  
  
• Loan volumes increased 0.9 per cent with almost three in 10 (29 per cent) saying bank lending will be one of the most important methods for financing growth over the next 12 months, behind private equity (36 per cent) and government grants (33 per cent).
  
  

Within Barclays Business Banking, SME technology firms are showing resilience. Computer hardware businesses, including data centres, saw a 7.1 per cent rise in cash inflows and a 14.9 per cent increase in international payments received. Data processing firms also recorded steady growth, with cash inflows up 5.0 per cent and overseas payments rising 2.8 per cent.

Elsewhere, the picture is more mixed. Across SMEs and large corporates, Science and Engineering R&D firms saw cash inflows fall by 9.5 per cent, while defence-focused businesses recorded a 13.1 per cent increase, highlighting how demand is shifting towards security-linked innovation.

This shift is reflected more widely across the innovation economy. Defence and national security markets are becoming a core growth pathway, with 57 per cent of firms saying they are targeting the sector and 62 per cent adapting products and services to meet customer requirements despite facing increasing compliance and security requirements (56 per cent).

A further one in three (28 per cent) believe their technology could strengthen national security or defence capability within five years, while 90 per cent say the UK and its allies must build stronger space capability to remain globally competitive over the next decade.

Mark Northen, Head of Innovation Banking at Barclays Business Banking said: “Many firms are taking a cautious approach to borrowing as they navigate slower routes to revenue and visibility barriers. At the same time, sectors such as defence infrastructure and computer hardware are showing strong growth potential. Ensuring businesses can access the right funding and expertise will be key to sustaining this momentum.

“Our focus at Barclays is to bring founders, investors, corporates and policymakers together to focus on what comes next and on how the UK can translate innovation into real-world impact. We’re working closely with innovative businesses right across the UK to provide access to expertise and networks to build the ideal ecosystem to accelerate their growth from early-stage innovation through to global scale.”

Backing UK innovation to scale

To support businesses to invest for growth, the £22bn Barclays Business Prosperity Fund is available to provide lending and refinancing to eligible Business Banking and UK Corporate Banking clients across the UK.

The Fund forms part of Barclays’ wider commitment to supporting UK businesses to invest, scale and navigate changing economic conditions.

Technology and innovation businesses can also access dedicated support through Barclays Innovation Banking, which provides specialist expertise and financing across the full growth journey, from early-stage development through to scale and IPO.

Ones to Watch – The AI 100

As businesses increase investment in AI to drive productivity and resilience, attention is also turning to where the UK’s next wave of innovation and growth will come from.

Barclays Eagle Labs has recently launched The Ones to Watch: AI 100 Report, a major new report spotlighting 100 of the UK’s AI driven scaleups shaping the future, as part of a broader effort to map and support emerging sources of technology-led growth.

Barclays Business Prosperity Index Research

¹This research is conducted as part of the Barclays Business Prosperity campaign.

The survey data was conducted among 501 technology and innovation business decision makers, between 7 ^th – 13 ^th May 2026, by Censuswide on behalf of Barclays. Businesses surveyed spanned a range of businesses including defence tech, health tech, quantum, software, climate tech, advanced manufacturing, hardware and AI.

Barclays anonymised client data, represents 26,000 technology and innovation businesses across Barclays Business Banking and UK Corporate Bank divisions. This includes businesses supported by Barclays Innovation Banking team, including software, technology, health tech, manufacturing, R&D and other computer-related activities. The top 5% of metric values are removed, in order to represent the typical behaviour of the average business, and in no way reflect Barclays’ performance.

£22bn is the total amount of lending Barclays has available to lend and support business growth among Business Banking and UK Corporate Banking clients in 2026. Subject to normal lending assessment, status and application. Terms and conditions apply.

About Barclays
Our vision is to be the UK-centred leader in global finance. We are a diversified bank with comprehensive UK consumer, corporate and wealth and private banking franchises, a leading investment bank and a strong, specialist US consumer bank. Through these five divisions, we are working together for a better financial future for our customers, clients and communities.

For further information about Barclays, please visit our website home.barclays