Bank of England Governor Andrew Bailey has called for international cooperation to address growing threats from artificial intelligence, warning that the United States and the Trump administration cannot achieve their ambitions alone.
Bailey's Call for Coordinated Testing
Speaking to the Guardian before his annual Mansion House dinner speech in London, Bailey emphasised that governments worldwide must collaborate to prevent malicious actors from accessing powerful and potentially destabilising digital tools. 'We've got to get better international understandings of how we deal with the introduction of frontier AI,' he said, arguing that stronger coordinated testing is essential to ensure AI models are safe for broader deployment.
Bailey's comments follow a temporary ban by US President Donald Trump on foreign nationals using Anthropic's advanced Claude Mythos model, which experts warn could threaten cyber defences. Although the ban was lifted weeks later, Bailey stressed that the US should recognise its inability to secure itself against escalating cyber threats or establish robust recovery plans without global cooperation. 'The US can't achieve what it sensibly wants to achieve, in terms of strengthening defences, on its own because it is a highly interconnected system,' he said.
In his Mansion House speech, Bailey elaborated: 'No country can seal itself off from the cross-border nature of systems that are prevalent today.'
Reeves Defends Economic Record
Bailey's call for action coincided with a defiant speech from Chancellor Rachel Reeves, who is preparing to leave the Treasury. In what is likely one of her last major appearances, Reeves defended her record and cautioned her successor not to waste the 'platform of stability' she had created. 'The record of the last two years makes clear that governments can achieve that [radical] change only when they combine radicalism with credibility,' she said. 'I had to earn that credibility in opposition, and I have proven it in government in every action that I have taken since I became chancellor. That hard-won credibility must be sustained and the foundations maintained if this work … is to continue.'
Andy Burnham is expected to be confirmed as Labour leader on Friday and become prime minister next week, with a new chancellor likely appointed soon.
Economic Indicators and Challenges
Reeves cited statistics to support her tenure: 'Last year, borrowing fell from 5.2% to 4.2% of GDP – its lowest level in six years. Investment is up, productivity is up, and wages are up too. Waiting lists are falling faster than at any time in the last 17 years and half a million children will be lifted out of poverty during the course of this parliament.' She added, 'If I had said two years ago that this is where we would be today, people would have doubted it, but we have proven the doubters wrong.'
With renewed conflict in the Middle East after the collapse of the US-Iran memorandum of understanding, Reeves warned that the UK economy would continue facing shocks. 'The resumption of hostilities in the Middle East in the last few days has shown that our economic resilience will continue to be tested, and the market response to those changes shows that there is still work to do to insure our economy and our country against a volatile global landscape,' she said.
The yield on 10-year UK government debt hit its highest level since May on Tuesday, exceeding 5%, before dipping slightly after Trump appeared to drop the threat of a 20% levy on ships transiting the Strait of Hormuz. A new chancellor would need to give 10 weeks' notice to the independent Office for Budget Responsibility for a new forecast before a planned autumn budget. Sustained higher gilt yields would increase the government's borrowing costs, eating into the £23.6bn of 'headroom' Reeves set aside against her fiscal rules in March. Additionally, whoever leads the Treasury must find an extra £4.7bn over four years to fund the defence investment plan.
Burnham is reportedly keen to announce a cost of living package, as households face higher energy bills this winter due to the war's impact.
Global AI Oversight
Bailey's remarks on international cooperation came as Demis Hassabis, British Nobel laureate and Google DeepMind entrepreneur, called for a US-led global AI watchdog to test advanced models and potentially halt their development if risks are too high. In an essay posted on X on Tuesday, Hassabis suggested that an AI model with cognitive capabilities equivalent to the human brain is 'probably only a few short years away.'
