AI Bubble Burst Could Spark Global Economic Downturn Warns Bank of England Governor

The governor of the Bank of England has warned that artificial intelligence could trigger a global economic downturn if the AI bubble bursts.

In a letter to G20 finance ministers, Andrew Bailey expressed concern about the volatility caused by energy shocks from the US-Iran war and the potential for a disorderly correction in markets.

Bailey noted that leverage is interacting with high valuations and market concentration, particularly in AI companies and hyper scalers, which could amplify a future market correction.