BoE governor says AI likely to displace jobs; UK urged to prepare

The governor of the Bank of England, Andrew Bailey, warned that the widespread adoption of artificial intelligence is likely to displace workers in a manner reminiscent of the Industrial Revolution, and he urged the United Kingdom to ensure training, education, and skills are in place so workers can shift into AI-enabled roles. Speaking on BBC Radio 4's Today programme, Bailey said jobseekers would find securing employment easier if they possessed the right skills, but he cautioned that younger, inexperienced workers could struggle to win entry-level roles as AI expands. He said policymakers must consider what AI is doing to the pipeline of workers and whether it might be changing it, while stressing that if people work with AI, the pipeline may not be dramatically altered, though the issue warrants close attention.

AI has become part of everyday life and is increasingly adopted by businesses and the public sector. The technology can process large data sets, identify patterns, and automate detailed tasks, but concerns persist about its impact on the jobs market. Official data released this week showed the UK unemployment rate at 5.1% in the three months to October, with the 18- to 24-year-old cohort bearing the largest burden — unemployment among 18- to 24-year-olds rose by 85,000 in the three months to October, the largest rise since November 2022, according to the Office for National Statistics. Some analysts argue that higher minimum wages and taxes have reduced the appeal of entry-level hiring, while others say AI growth could eventually reduce demand for junior staff. Entry-level professional roles in fields such as law, accountancy, and administration are viewed as particularly exposed to AI adoption, prompting firms to rethink staffing plans.

The tale of AI’s impact on hiring is already influencing major firms. Mohamed Kande, PwC’s global chairman, told the BBC the firm is scaling back plans to increase headcount, noting that AI may enable work that previously required more staff and could lead to a different mix of hires rather than simply higher numbers. PwC clients in data-heavy tasks that once required extensive human review could increasingly rely on AI models to complete work in a fraction of the time. Bailey said history shows that technological shifts often displace workers before delivering broad productivity gains, and he warned that the pace of AI adoption will depend on how quickly the economy accepts the technology and on the preconditions needed for widespread use.

Beyond productivity, Bailey acknowledged concerns about asset valuations in the AI space. The Bank of England has flagged the risk of an AI-related bubble, and the topic has drawn attention from investors and policymakers alike. JPMorgan Chase chief executive Jamie Dimon told the BBC in October that he was far more worried than others about the risk of a serious market correction in the coming years. Bailey said policymakers would monitor the valuation question closely, while noting that the majority of large firms continue to generate cash flow and that not every AI investment will be a winner. He added that the Bank, which also uses AI, remains in an era of experimentation and that mainstreaming the technology across the economy will take time, but is critically important for unlocking productivity gains.

Bailey framed AI as a potential engine for the next leg up in the UK’s productivity growth, but stressed that a successful transition depends on aligning policy with rapid technological change. The Bank of England is pursuing the right mix of regulatory, educational, and infrastructural steps to support a gradual, durable shift toward an AI-enabled economy, while continuing to monitor emerging risks in the labor market and financial markets as the technology unfolds.