AI Firms Fuel UK Productivity Gains as Jobs Disappear

The Bank of England (BOE) has found that British firms are becoming more productive due to the adoption of artificial intelligence (AI), but this productivity gain comes at the cost of job opportunities.

The BOE staff blog post analyzed data from software and IT consulting firms, which increased their contribution to annual productivity growth tenfold compared with the decade before Covid, contributing 0.1 percentage point in 2023-2025.

Firms adopting AI are also becoming more productive, particularly in sectors like office administrative and business services, where repetitive tasks like scheduling meetings or processing invoices are ripe for automation.

However, some of the increase in labour productivity comes at the cost of fewer job opportunities. Vacancies in jobs most exposed to AI fell by 15% over the past three years, compared with declines of 10% for occupations with medium exposure and 6% for low-exposure roles.