UK Job Market Hit Hardest by AI: Morgan Stanley Study Reveals Net Losses
New research from the investment bank Morgan Stanley has revealed that the United Kingdom is losing more jobs than it is creating due to artificial intelligence, with the impact being more severe than in other major global economies. The study, which was shared with Bloomberg, indicates that British companies reported net job losses of 8% over the past twelve months as a direct result of AI implementation.
Comparative Analysis with Global Peers
The Morgan Stanley research surveyed companies across five key industries that have been using AI for at least a year: consumer staples and retail, real estate, transport, healthcare equipment, and automotive. The findings show that the UK's 8% net job loss rate is the highest among leading economies, including the United States, Japan, Germany, and Australia. In contrast, US businesses reported similar productivity gains but managed to create more jobs than they eliminated.
Productivity Gains Amid Job Cuts
Despite the negative employment figures, the study found that British businesses reported an average productivity increase of 11.5% thanks to AI adoption. This suggests that while companies are becoming more efficient, the benefits are not translating into job creation within the UK market. The research highlights a worrying trend where technological advancement is contributing to workforce reduction rather than expansion.
Worker Anxiety and Demographic Concerns
A separate survey by the international recruitment firm Randstad found that more than a quarter of UK workers are now worried their jobs could disappear completely within the next five years due to AI advancements. Younger workers, particularly those from Generation Z, expressed the greatest concern about AI's impact and their ability to adapt to changing workplace demands. In comparison, baby boomers – those born between 1946 and 1964 who are nearing retirement – showed greater confidence in their job security.
Targeted Job Reductions and Economic Pressures
The businesses surveyed by Morgan Stanley indicated they were most likely to cut early-career positions requiring two to five years of experience in the UK. This trend is exacerbated by broader economic pressures, including rising minimum wages and increased employer national insurance contributions, which are squeezing hiring capabilities across sectors. Unemployment has now reached a four-year high, compounding the challenges faced by the workforce.
Political and Business Warnings
Earlier this month, London Mayor Sadiq Khan issued a stark warning that AI could destroy swathes of jobs in the capital, potentially "ushering in a new era of mass unemployment." In his annual Mansion House speech, Khan emphasised that London is "at the sharpest edge of change" due to its heavy reliance on white-collar workers in finance, creative industries, and professional services such as law, accounting, consulting, and marketing.
Khan argued that there is a "moral, social and economic duty to act" to ensure new jobs are created to replace those that will disappear, with entry-level and junior positions expected to be the first casualties. His comments were echoed last week by Jamie Dimon, CEO of US bank JP Morgan, who told the World Economic Forum in Davos that governments and businesses must intervene to support workers displaced by AI technology to prevent potential civil unrest.
The Path Forward
The Morgan Stanley study underscores the urgent need for strategic planning and policy intervention to manage AI's disruptive impact on the UK labour market. While productivity gains are evident, the net loss of jobs presents significant challenges for economic stability and worker welfare. Addressing these issues will require coordinated efforts from policymakers, business leaders, and educational institutions to reskill workers and create new opportunities in emerging sectors.
