Artificial intelligence is costing more jobs than it is creating in the UK, which is getting left behind in the latest technology arms race.
Research from Morgan Stanley, the Wall Street investment bank, found that the introduction of AI led to a net 8 per cent reduction in roles over the past 12 months, double the average reported by companies in America, Germany, Japan and Australia.
The data will frustrate Sir Keir Starmer, who has repeatedly promised to turn the UK into an AI “superpower”. It will also fuel the debate about what AI means for jobs. Some business leaders have said they expect it to replace tasks rather than roles, whereas others are less optimistic.
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Almost 1,000 businesses from the five countries, all of which had been using AI for at least a year, took part in the study. On average, they said they had eliminated 11 per cent of previous roles because of AI and that a further 12 per cent would not be back-filled.
That was partially offset by a 19 per cent increase in new hires as a result of AI, leading to a 4 per cent net job loss overall. The study suggests the US is, so far, the biggest beneficiary of this latest technology revolution, with AI creating more jobs there than it is making redundant.
UK respondents said 23 per cent of roles had either been eliminated or would not be back-filled, in line with the global average. However, it was with new hires that the UK fell behind, with companies saying AI had created only 15 per cent more roles.
Morgan Stanley’s analysts found that it was “mid-career professionals” — those with between two and ten years’ experience — that are being most affected by AI. They were most likely to lose their jobs but were also the most hired, retrained and redeployed.
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On average, UK businesses reported an 11 per cent increase in productivity as a result of their investment in AI, broadly in line with the global average and better than what has been seen in the US and Germany.
The AI revolution comes at a challenging time for the UK jobs market, with companies reluctant to hire amid lingering economic and geopolitical uncertainty, as well as escalating payroll costs.
As a consequence, UK businesses are particularly scaling back their hiring of roles most likely to be affected by AI, such as software developers and consultants, according to a Bloomberg analysis of official employment data.
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Job vacancies in the UK have declined by a third in the UK since 2022, equivalent to 500,000 roles. Data published on Monday from Adzuna, the jobs site, showed job adverts fell for a sixth straight month in December.
Morgan Stanley’s analysts noted that they had only surveyed companies in industries they think are most likely to be affected by AI and so the results “likely represent the most significant downside case” for the impact on the global workforce.
“Even so, we believe this provides an early warning regarding the potential negative employment effects as AI technology continues to improve,” they added.
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