Artificial intelligence is increasingly being blamed for job losses in the UK, as the country’s labour market shows clear signs of cooling. Unemployment rose to 4.6% in the three months to the end of April, up from 4.4% at the start of the year, and separate figures from HMRC show 276,000 jobs have disappeared since the autumn budget. While most economists argue that economic factors remain the primary driver, there is growing anecdotal evidence that AI is accelerating the slowdown.
High-profile companies including BT, Amazon, Ocado and Microsoft have announced job cuts linked to automation and AI. BT has said advances in AI could lead to further cuts beyond the 55,000 already planned. Ocado has shed hundreds of roles while using AI to reduce costs. A survey by Boston Consulting Group in January found half of UK companies plan to redirect investment from staff to AI due to rising employment costs. The International Monetary Fund estimates 60% of jobs in advanced economies like the UK are exposed to AI, with half potentially negatively affected.
Business groups say the labour market is being hit by a £25bn rise in employer national insurance contributions and a 6.7% increase in the national living wage, both introduced in April. Bank of England research suggests recruitment plans are being frozen. Economic growth is expected to remain sluggish at about 1% in 2025, amid weak consumer confidence, high inflation, elevated borrowing costs, and uncertainty from Donald Trump’s trade war. These conditions may push employers towards AI as a cost-saving alternative to hiring humans.
Some sectors are more exposed than others. KPMG research indicates jobs in writing, translation, programming, IT support, public relations, graphic design and law could be heavily affected. Younger workers are particularly hard hit: UK university graduates face the toughest jobs market since 2018, and entry-level vacancies have fallen by a third since ChatGPT launched in November 2022. Rookie workers are often given simpler tasks that are easier to automate.
However, there are also opportunities. AI can free up workers for more interesting tasks, and new roles are being created. The government has trumpeted £44bn of AI investment in Britain since last year, claiming it has created 13,250 jobs in 12 months. Ministers are working with tech firms to train workers for AI-related roles. The impact remains nuanced, with both job destruction and creation expected as the technology evolves.
