In a corner of leafy Cheshire sits a Siemens factory. Its unassuming location masks its status as a factory of the future, driven by technology and automation. Siemens Congleton manufactures variable speed drives – electronic devices that control the speed and torque of a motor. The Congleton team operates in a highly competitive global market, facing pressure from low-cost international rivals and customers who increasingly demand bespoke solutions.
Congleton began as a warehouse and switchboard workshop more than 50 years ago. At that time, it was not manufacturing drives and did not begin doing so until the 1990s, when it produced around 50,000 units a year. Today, with a similarly sized team and the same factory footprint, the site can manufacture more than one million electrical devices annually.
How? Through a relentless focus on productivity, backed by digitalisation, automation and a highly skilled local workforce that is continually being upskilled in next-generation technologies, such as industrial AI.
While Siemens Congleton is not entirely unique, it represents a future that feels out of reach for much of the UK. Put simply, the country has a productivity problem, and it is time we got to grips with it.
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This means getting more out of the resources we already have – working smarter, not just harder. For businesses, and for modern economies like the UK, it is the only sustainable path to growth: progress driven by innovation, technology, and better ways of working.
Much of the recent row over the Budget reflects the OBR’s downgrade of productivity forecasts, which reduced expected growth and made it harder for the government to stay within its fiscal rules.
Conversely, the OBR suggests that if productivity growth reached 1.5 per cent in the medium term, the Budget could move to a £59bn surplus by 2029-30. 2026 must be the year we move from an industrial strategy that sets out plans to one that drives action, underpinned by new technologies such as AI, to deliver progress.
Our productivity challenge is rooted in the low uptake of technology. The UK lags behind other countries in its adoption of automation and digital technologies. It also ranks 24th in the world for robot density, making it the only G7 nation outside the top 20.
Around the world, Siemens technologies – from digital twins to AI – are helping businesses supercharge efficiency, competitiveness and resilience. These tools are now transforming everything from buildings to grid infrastructure to factories, streamlining decision-making and enhancing business competitiveness.
Our partnership with Microsoft on the AI-based industrial copilot cuts weeks off design and planning while supporting industries facing skills shortages. Meanwhile, Siemens believes industrial AI could boost productivity by as much as 50 per cent for some customers, enabling people to achieve more than they could without AI in driving innovation.
A major part of the productivity solution lies in how the UK adopts digital technologies of this kind. While a handful of leading-edge firms are pushing forward, adoption is lagging across much of the economy due to long-standing barriers. These barriers particularly affect the 99 per cent of businesses that are SMEs, which form the backbone of the economy and drive growth.
So, what can we do about it? While this is not all the government’s responsibility – businesses must also step up and invest in their people and in technology – action often seems too slow. Here is what I would like to see happen in 2026 to create an environment that supports the uptake of technology.
First, the government should expedite some of the announcements made in the summer, particularly those aimed at reducing input costs and freeing up finance for industry. For example, the much-heralded British industrial competitiveness scheme, designed to reduce energy prices for around 7,000 businesses, is not set to begin until 2027 – 18 months after it was announced. That is not good enough; it should be fast-tracked or backdated.
Similarly, the industrial strategy provided the British business bank and national wealth fund with additional funding to support and crowd in private investment in the eight industrial strategy sectors. Yet, six months on, it still feels as though little progress has been made.
We must also accelerate initiatives such as the AI growth zones to ensure the UK keeps pace with AI deployment, which is set to drive a new industrial revolution. With focus and political will, progress can – and must – be accelerated, or UK businesses will be left behind in the global race.
Second, we need a national approach to skills that aligns with the aims of the industrial strategy. The Budget pledged £13bn for regional mayors to invest in skills and infrastructure. That is certainly welcome, but it will only have impact if it is coordinated. Local regions should work with businesses and education providers to develop skills plans that form part of a regional implementation of a national strategy. These plans should align with the industrial strategy while reflecting local strengths and needs.
Further steps should also be taken to support the reskilling and upskilling of existing workers as technology advances. While there are incentives for companies to invest in physical capital, similar support should be available for investment in human capital – for example, by enhancing current tax relief on workplace training to encourage greater employer investment.
And finally, it is time to strengthen the link between productivity and our national growth mission. It may not be a headline-grabbing issue, but it matters. We need a clear, long-term productivity agenda with measurable targets embedded in both our fiscal and industrial strategies. The machinery of government must also adapt: make productivity a priority and organise government structures accordingly.
Let this be the year we stop admiring the problem and start solving it – not with grand gestures, but with clear priorities and consistent delivery. We welcome the opportunity to have that conversation with our peers in industry and with policymakers in 2026.
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