AI Productivity Gains in UK Come With Job Losses

The Bank of England's analysis found that British firms developing and using artificial intelligence have become more productive, but this gain comes at the expense of jobs. Software and IT consulting firms significantly contributed to annual productivity growth between 2023-2025, increasing their contribution tenfold compared to the decade before Covid. This period also saw information-service providers shift from being a drag on productivity to becoming drivers of it.

The analysis found that software and IT consulting firms' contribution to annual productivity growth increased by 0.1 percentage point between 2023-2025, contributing significantly to overall productivity gains during this time. The shift in the role of information-service providers from hindering to driving productivity is also a notable finding.

The Bank of England's analysis on AI and its impact on jobs serves as an example of how technological advancements can have mixed effects on employment and productivity levels. As firms continue to develop and use AI, policymakers will need to carefully consider the implications for job creation and retention.