AI Bubble Bursts: Bank of England Warns of Global Economic Downturn
The governor of the Bank of England has sounded the alarm on the risks of artificial intelligence causing a global economic downturn. In a letter to G20 finance ministers, Andrew Bailey warned that a 'future market correction' could spread across the world if the AI bubble bursts.
Bailey pointed out that investors are borrowing more and leveraging high valuations in AI companies, which could amplify a future market correction. He also highlighted the fragilities in sovereign debt markets as a potential trigger for a global economic downturn.
The warning comes as Chancellor John Healey announced a £100 million fund aimed at backing British AI start-ups. The fund is part of the Government's efforts to grow the country's 'Sovereign AI' capacity, which includes homegrown AI technology aimed at ensuring the UK is not dependent on services and infrastructure developed abroad.