Bank of England governor Andrew Bailey has cautioned that the widespread adoption of artificial intelligence could lead to significant job displacement, drawing parallels to the transformative effects of the Industrial Revolution. In a recent interview on BBC Radio 4’s Today programme, Bailey stressed that while AI may not result in mass unemployment, it necessitates a concerted effort to equip workers with the training and skills needed to thrive in an AI-driven economy.
Bailey pointed out that AI’s ability to process vast amounts of data and automate tasks means that certain roles, particularly entry-level positions in fields like law, accountancy, and administration, are at high risk. He highlighted that younger, inexperienced professionals might find it increasingly difficult to secure these jobs, as AI systems take over tasks that traditionally served as stepping stones for career development. This concern is underscored by recent UK unemployment figures, which show a rise to 5.1% in the three months to October, with a notable increase of 85,000 unemployed 18 to 24-year-olds, the largest surge since late 2022.
To mitigate these effects, Bailey advocated for robust education and retraining programs, enabling workers to shift into roles that leverage AI rather than being replaced by it. He noted that individuals with AI-related skills would find employment “a lot easier,” emphasizing the importance of adapting the workforce pipeline. This sentiment is echoed by industry leaders, such as Mohamed Kande, global chairman of PwC, who revealed that the firm is scaling back hiring plans for junior staff due to AI integration, opting instead for a different set of skilled employees.
Historically, technological advancements have often sparked fears of widespread job loss, but Bailey recalled that the Industrial Revolution ultimately did not cause mass unemployment, though it did displace workers from specific jobs. He believes AI will follow a similar pattern, necessitating preparedness through policy and investment. Moreover, Bailey identified AI as the “most likely source of the next leg up” for UK economic growth, citing its substantial potential to enhance productivity across various sectors.
However, the transition won’t be instantaneous. Bailey acknowledged that the Bank of England and other institutions are still experimenting with AI, and its mainstream adoption will take time. He called for focusing on creating the right conditions, such as infrastructure and regulatory frameworks, to harness AI’s benefits effectively. This cautious approach is reflected in the bank’s own use of AI, which remains in the experimental phase.
Beyond the labor market, Bailey raised alarms about a potential AI bubble, where the valuations of tech firms might be overstated, reminiscent of past crises like the dotcom bubble. He mentioned that policymakers must “watch the valuation question” closely, as a sharp correction could have serious economic consequences. This concern is shared by figures like Jamie Dimon, CEO of JP Morgan, who expressed heightened worry about market corrections linked to AI hype.
In conclusion, Bailey’s remarks underscore a dual narrative: AI presents both opportunities for economic advancement and challenges for workforce stability. The key lies in proactive measures to skill workers, monitor economic risks, and ensure that technological progress translates into broad-based prosperity. As AI continues to evolve, ongoing dialogue between policymakers, businesses, and educators will be crucial to navigate this transformative era.
