AI is boosting UK productivity and harming jobs, says Bank of England

LONDON – British businesses harnessing artificial intelligence (AI) are experiencing heightened productivity, but at the expense of job opportunities, according to analysis by the Bank of England (BOE). The BOE's staff blog post revealed that software and IT consulting firms, which increased their contribution to annual productivity growth tenfold compared to the pre-pandemic decade, contributed 0.1 percentage point in 2023-2025.

In contrast, information-service providers transitioned from being a hindrance to a facilitator of productivity during the same period.

Moreover, firms leveraging AI demonstrated improved productivity, especially in sectors involving repetitive tasks, such as scheduling meetings or processing invoices. The report suggests that British businesses are transitioning from AI experimentation to integrating it as a growth driver. Despite AI's rising adoption, its impact on productivity has remained elusive in growth statistics.

BOE Governor Andrew Bailey posited that AI's effect on productivity will likely follow a J-curve, requiring businesses to adapt to the technology.

However, the gain in labor productivity also stems from a decline in job opportunities. A separate BOE blog post indicated that vacancies for jobs most exposed to AI dropped by 15% over the past three years, compared to declines of 10% for occupations with medium exposure and 6% for low-exposure roles. Customer service and administrative roles, which are particularly vulnerable to AI, witnessed the most significant decline, with vacancies falling by more than 20%.

Haley Schlicht, an analyst in the BOE’s data and statistics division, noted that industries reporting higher AI adoption are showing tentative signs of improved productivity performance. The BOE's analyst emphasized that if AI genuinely behaves like a general-purpose technology, these productivity and labor-market signals should be interpreted together rather than in isolation.