Bailey sounds alarm on AI as youth unemployment jumps
AI could displace workers on a scale not seen since the Industrial Revolution, Bank of England governor Andrew Bailey has warned, as the UK jobs market shows fresh signs of strain.
Bailey said the rapid adoption of AI across the economy was “most likely” to have a similar effect to past technological upheavals.
“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.”
Speaking to BBC Radio 4, Bailey said workers with AI-related skills would find it “a lot easier” to secure employment.
But, he warned that younger, inexperienced candidates could be squeezed out as firms automate junior tasks.
“We do have to think about, what is it doing to the pipeline of people?” he claimed. “Is it changing it or not?”
AI hits entry level jobs
The warning comes as official data shows the UK labour market losing momentum.
The unemployment rate rose to 5.1 per cent in the three months to October, according to the Office for National Statistics, with younger workers bearing the brunt.
Unemployment among 18 to 24-year-olds jumped by 85,000 over the period, the largest increase since late 2022.
Recruiters say caution among employers has been building for years.
Data from the Recruitment and Employment Confederation shows permanent placements fell to 536,000 in 2024, down from more than 800,000 the year before, as firms delayed long-term hiring decisions.
Some businesses point to higher minimum wages and tax pressures. Others are more blunt: AI is doing the work junior staff used to do.
Entry-level roles in law, accountancy, finance and administration are widely seen as the most exposed.
PwC’s global chairman Mohamed Kande recently acknowledged the shift, saying the firm still wanted to hire, but not “the same level of people”.
The anxiety is particularly acute in banking and professional services, where generative AI tools are accelerating quickly.
OpenAI last week unveiled a new version of ChatGPT that it says can outperform human experts on tasks typically assigned to junior investment banking analysts/
Morning Wire previously reported that AI could replace around 10 per cent of roles in the UK banking sector, roughly 27,000 jobs, with banks expected to invest £1.8bn in generative AI by 2030
Still a growth engine
Despite the risks, Bailey made clear the Bank of England sees AI as a powerful force for economic growth.
He described the technology as “the most likely source of the next leg up” in UK productivity.
But, he also cautioned that history suggests breakthroughs take time to feed through into real gains.
“How quickly it comes through is another question,” he said. “History would suggest that it does take some time.”
The Bank itself is already experimenting with AI, Bailey added, though like many institutions it remains in trial mode rather than full deployment.
The UK government, meanwhile, has announced billions of pounds of investment aimed at turning Britain into an AI hub and creating thousands of new jobs – a bet that displaced workers can be retrained fast enough to keep up.