AI Bubble Warning Sparks Global Economic Fears

Bank of England Governor Andrew Bailey has issued a warning about the potential risks associated with the artificial intelligence bubble. In his capacity as chairman of the Financial Stability Board, he highlighted concerns that a collapse in AI valuations could trigger a major global financial downturn.

Bailey also pointed to market concentration and energy shocks linked to the US-Iran war as significant risks. The warning comes as the UK government announces a £100 million fund to support British AI start-ups and grow domestic AI capacity, with initiatives focused on tackling key challenges such as NHS waiting lists, cybersecurity, and defense.

The scheme aims to encourage firms to compete for funding, driving job creation, better public services, and nationwide economic growth. Chancellor John Healey said the initiative is designed to ensure Britain leads in AI innovation, positioning the country at the forefront of technological advancements.