Bailey Sounds Alarm on AI Market Correction 'Disaster'
Bank of England Governor Andrew Bailey has issued a stark warning about the risks building up around artificial intelligence investment. In a letter to G20 finance ministers, he described a potential 'disorderly AI market correction' as a 'disaster' for the world economy.
The warning is significant because it's not just a stock market story, but also points to the deepening financial ties between AI developers and hyperscale technology firms building the infrastructure that powers them. This includes the data centre sector, which has been flagged by regulators as vulnerable due to stretched valuations, rising debt, and growing concentration in the AI sector.
The Bank of England's Financial Policy Committee has been warning about these vulnerabilities for over a year, drawing comparisons with the dotcom era. Bailey's letter reiterates this view at G20 level, adding that these risks interact with strains elsewhere, including sovereign debt markets and geopolitical shocks.