UK looks to robots to boost Its stalling economy

Businesses in the UK are being pushed toward automation as labor becomes more expensive and harder to find. The shift is already visible in small firms that once relied on large teams to handle basic tasks.

One example is K10, a Japanese takeaway chain with five sites in the City of London. The company’s owner, Maurice Abboudi, said rising costs have forced him to change how his business operates:- “We had 52 people working pre-Budget. We’ve now got 38. The costs of the National Insurance and business rates increases were over £160,000 for us and we’re a small business. So our profit for the year was absolutely decimated.”

The business did not fire staff. But when people left, they were not replaced. Instead, the sites added ordering kiosks similar to those in McDonald’s. Customers now go to a screen instead of a till worker.

Abboudi said this was necessary after the £25bn tax hit to employers under Rachel Reeves’s first Budget. The move is now common among firms dealing with rising operating costs. But taxes are only part of the pressure. The country is aging.There are more pensioners and fewer working-age adults.

Firms need to produce the same output with fewer workers. K10 now uses automated ovens and outsources its vegetable chopping. Even with staff numbers down by a quarter, each branch still handles 400 to 500 lunchtime orders.

Businesses adjust operations

Britain’s aging population is often described as an economic burden. A smaller workforce would need to support a larger retired population, which could push taxes even higher. But Abboudi’s case shows another direction.

Workers removed due to cost pressures could later become more valuable when the labor pool shrinks. Shortages may force companies to invest in technology that lifts productivity. Lack of productivity has been linked to weak wage growth and stagnant living standards.

Daron Acemoglu, a Nobel prize-winning economist at MIT, said, “With an ageing population, there may be an impetus for employers to invest more in machinery, especially those that would substitute for certain types of labour. That may increase productivity.” He pointed to South Korea, Japan, and Germany.

These countries aged faster than others in the 1990s through 2010s. In response, their companies invested in robotics and related technology. He said this helped them become global leaders in industries such as car manufacturing.

Birth rates in the UK are falling.The fertility rate is 1.4 children per woman, the lowest since at least 1938. To keep population size stable, the rate would need to be 2.1. If 100 people represented today’s population, their number would fall to 77 by the next generation.

Immigration could offset this, but public opposition has risen. At the same time, the number of pensioners is growing. The Office for National Statistics said there are now twice as many people living to 100 as there were twenty years ago.

Economists debate future impact

The Office for Budget Responsibility projects government debt could rise from around 100% of GDP to more than 270% of GDP by the 2070s. But not all economists agree that ageing will slow the economy.

Acemoglu said, “Ageing societies if anything grow faster not slower than normal, non-ageing societies.” He said the past three to four decades do not support the idea that ageing is an automatic drag on growth.

Maria Vassalou, head of the Pictet Research Institute, said the public is being told two opposing stories at the same time: that AI will destroy jobs, and that ageing will create labor shortages. She said both claims are treated negatively, even though they are linked.

“Most of the work out there focusses on how deteriorating demographics will hit growth and lead to economic depression. On the other hand, there is a lot of talk about the effects of AI, and it’s all about replacing workers and creating unemployment,” she said. She argued technology responds to the need for productivity.

Robotics expand into food and retail

The UK has lagged behind other advanced economies in adopting robots, partly because it had a younger workforce and higher migration. That equation is changing. If labor becomes expensive, companies replace it.

Acemoglu said this could benefit workers who remain. When labor is scarce, wages rise and workers move into higher-skilled roles.

Abboudi said automation is spreading fast. He said, “The future is going to be all about robotics. It’s happening already.” He described a fully automated pizza shop prototype: the dough is opened by machine, sauces and cheese added, cooked on a conveyor, sliced by robotic arm, boxed, and sent out. One person may handle toppings or load a delivery robot. He said this could be common in 10 to 15 years.

When future pensioners place an order, the food may move from kitchen to doorstep without a single human touch.

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