Exotec urges UK tax breaks for warehouse automation

Exotec has called on the UK to adopt more targeted tax incentives for warehouse automation, pointing to Italy's approach as a model.

The intervention comes as warehouse and logistics operators across Europe face labour shortages, higher costs and pressure to speed up fulfilment. Those conditions are pushing more businesses to consider automation, but investment levels still vary widely between countries.

Italy has introduced tax credit schemes for advanced machinery and robotics through its Industry 4.0 and Transizione 4.0 programmes. Under those measures, businesses investing in automated systems can claim tax credits of up to 20% on qualifying investments up to €2.5 million.

That contrasts with the UK, where support for automation comes through broader government mechanisms rather than sector-specific incentives. Exotec argues that a more focused approach for warehousing and logistics would help operators justify investment in systems that can be expensive to install.

Asaf Curelaru, Operations Director for UK & Ireland at Exotec, said the pressures driving automation in Europe differ from those in some other markets.

"Europe's shift towards warehouse automation is being driven by a different set of pressures to other regions," said Asaf Curelaru, Operations Director for UK & Ireland at Exotec.

He said labour constraints are central to that shift, particularly in Britain, where warehouse employers continue to struggle with recruitment and retention.

"For many operators, the priority is not only speed or scale, but improving efficiency and unit economics while dealing with persistent labour shortages and rising operating costs," Curelaru said.

Labour pressure

Labour availability has become a defining issue for many warehouse operators, especially as eCommerce and retail supply chains demand greater consistency and faster turnaround. High turnover and difficulty building stable teams have increased interest in automated systems that can support day-to-day operations.

"Labour availability is becoming one of the defining issues for warehouse operators in Europe," Curelaru said. "In the UK, turnover remains high, and many businesses are finding it difficult to build stable, scalable warehouse teams. This makes automation increasingly relevant, not as a standalone answer, but as part of a broader strategy to improve resilience, productivity and consistency."

Storage constraints and rising occupancy costs are also shaping investment decisions. Operators are looking for ways to increase throughput and use existing warehouse space more efficiently, particularly in areas where expansion is difficult or expensive.

"Rising warehouse costs and the need for greater storage density are also key reasons businesses are investing in automation," Curelaru said. "Automated systems can help operators improve throughput and make better use of existing warehouse space, but the business case is often held back by the level of upfront investment required."

Policy gap

Exotec argues that Italy's tax credit structure lowers that initial hurdle and gives businesses a clearer financial case for upgrading warehouse operations. By contrast, UK operators often have to absorb the full cost of automation projects while facing the same labour and productivity pressures as rivals elsewhere in Europe.

Exotec is part of a growing warehouse automation market serving retailers, distributors and other logistics-heavy sectors. More than 50 brands use its robotic systems across more than 200 locations worldwide, including Carrefour, Decathlon and UNIQLO.

Its comments add to a broader debate over how governments should support industrial modernisation and supply chain productivity. While the UK has backed business investment through general tax and capital allowance measures, Exotec contends that warehousing has not received the targeted policy attention seen in Italy.

"The UK's limited targeted automation incentives risk leaving businesses at a competitive disadvantage. While other countries encourage automation, UK businesses are having to fund these investments themselves, making automation projects difficult to justify despite mounting labour pressures. The good news is that Italy has already shown what is possible - and the UK has every opportunity to follow suit," Curelaru said.