Bank of England governor: AI could cause global economic downturn

The governor of the Bank of England, Andrew Bailey, has warned that artificial intelligence (AI) could trigger a global economic downturn in a letter to G20 finance ministers. Bailey, serving as chairman of the Financial Stability Board, highlighted the vulnerability of markets to a potentially disorderly correction, especially given existing fragilities in sovereign debt markets. He cautioned that a large shock or combination of shocks could simultaneously trigger multiple vulnerabilities.

The warning comes amidst a £100 million fund announced by Chancellor John Healey to support British AI start-ups, as part of the UK government's strategy to bolster its "Sovereign AI" capacity. The fund aims to ensure the country is not reliant on foreign-developed AI technology, with the goal of fostering innovation in healthcare, cybersecurity, and defense.

Healey emphasized Britain's position as a hub for innovative AI companies and its determination to lead in harnessing AI technology for economic growth and job creation.