Britain is shedding more jobs than it creates because of artificial intelligence, with the impact felt more severely than in other large economies, according to research by Morgan Stanley. The investment bank found that British companies reported net job losses attributable to AI over the past year, a decline of 8%, the steepest among leading economies including the US, Japan, Germany and Australia.
The study, shared with Bloomberg, surveyed businesses that have used AI for at least a year across five industries: consumer staples and retail, real estate, transport, healthcare equipment, and cars. It found that UK firms recorded an average 11.5% increase in productivity aided by AI, but unlike their US counterparts, who created more jobs than they cut, British businesses reduced their workforces.
The findings suggest UK workers are being hit particularly hard by the rise of AI, against a backdrop of elevated costs and taxes weighing on the job market. Unemployment stands at a four-year high, while increases in the minimum wage and employer national insurance contributions are constraining hiring.
Separately, a survey by the recruitment company Randstad found that more than a quarter of UK workers fear their jobs could disappear completely within five years due to AI. Younger employees, particularly those in Gen Z, expressed the most concern about AI's impact and their ability to adapt, while baby boomers nearing retirement showed greater confidence. The Morgan Stanley research indicated that businesses are most likely to cut early-career roles requiring two to five years of experience in the UK.
The mayor of London, Sadiq Khan, recently warned that AI could destroy large numbers of jobs in the capital and “usher in a new era of mass unemployment”. Speaking at his annual Mansion House address, Khan said London is “at the sharpest edge of change” because of its reliance on white-collar workers in finance, creative industries, and professional services such as law and accounting. He argued that there is a “moral, social and economic duty to act” to create replacement jobs, with entry-level and junior positions most at risk.
Last week, Jamie Dimon, the head of JP Morgan, told the World Economic Forum in Davos that governments and businesses would need to intervene to assist workers displaced by AI, warning that failure to do so could lead to civil unrest.
