The rapid growth of artificial intelligence in UK workplaces is likely to displace people from jobs, according to the governor of the Bank of England, Andrew Bailey. He said the impact of AI could echo the disruption seen during the Industrial Revolution, with a new wave of job losses and transformation across sectors.
Bailey emphasised that the country needed to “have the training, education, [and] skills in place” so that workers can transition into jobs that use AI technology. “People looking for a job would find securing employment a lot easier if they had such skills,” he told BBC Radio 4’s Today programme.
The governor also warned that AI may make it harder for inexperienced and younger professionals to secure their first roles, an issue already becoming evident in the UK’s current labour market. “We do have to think about, what is it doing to the pipeline of people? Is it changing it or not?” he said. While Bailey believed working with AI may not alter the pipeline for some, he said the issue was significant enough to warrant attention.
AI and entry-level jobs under pressure
Official figures released last week by the Office for National Statistics (ONS) reveal the pressures facing young workers. The UK unemployment rate rose to 5.1% in the three months to October, with the number of unemployed 18 to 24-year-olds increasing by 85,000 in that period — the largest rise since late 2022.
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Employers and experts have pointed to a combination of factors, including recent rises to the minimum wage and higher taxes, as reasons for reduced entry-level hiring. But the rapid integration of AI into business operations is adding further complexity. Sectors such as law, accountancy and administration are seen as particularly vulnerable, with firms able to automate work that previously required junior staff.
Mohamed Kande, global chairman of PwC, told the BBC that the accountancy giant was already scaling back its hiring plans. “Now we have artificial intelligence. We want to hire, but I don’t know if it’s going to be the same level of people that we hire; it will be a different set of people.” He said that tasks that once required teams of consultants to review data and documents could now be completed by AI models in a fraction of the time.
Lessons from history
Bailey drew comparisons to previous technological upheavals, referencing concerns expressed as far back as the time of Queen Elizabeth I over inventions such as the knitting machine. “As you saw in the Industrial Revolution, now over time, I think we can now sort of look back and say it didn’t cause mass unemployment, but it did displace people from jobs and this is important,” he said. “My guess would be that it’s most likely that AI may well have a similar effect. So we need to be prepared for that, in a sense.”
He argued that AI holds promise as a driver of future growth and productivity. “In terms of its potential to improve productivity growth, I think it’s pretty substantial. It will get used across the economy. How quickly it comes through is another question, history would suggest that it does take some time.” But he stressed the importance of preparation to ensure the benefits are widely shared.
The Bank of England’s view is that education and training systems must keep pace with technological change. Bailey said that while the Bank itself was experimenting with AI, widespread and effective adoption across the economy would depend on businesses and institutions focusing on the necessary preconditions. “To get it into sort of mainstream, everyday use will take some time, but it’s critically important that we obviously focus on getting the pre-conditions and all the conditions in place for that to happen,” he said.
Concerns over AI bubble
Bailey also addressed concerns about the risk of an AI-driven asset bubble. The Bank of England has recently warned of a potential crash in the value of AI firms, drawing parallels with the dotcom bubble at the turn of the century.
He said policymakers “have to watch the valuation question”, noting that while many of the largest companies are generating strong cash flow, there is no guarantee all will succeed. “Of course, it’s still the case that it doesn’t mean they’ll all be winners. We’re watching it very closely, because we do need to watch, obviously, what the consequences of any sharp unwinding could be.”
The growing adoption of artificial intelligence is forcing employers, policymakers and educators to consider how best to prepare workers for the next wave of economic change. As Bailey said, the challenge will be ensuring that people — particularly younger jobseekers — have the skills and support to succeed as the labour market evolves.
