Bank of England Governor Warns AI Could Spark Global Economic Downturn

The governor of the Bank of England has warned that artificial intelligence could trigger a major global economic downturn.

In a message addressed to G20 finance ministers, Andrew Bailey stated that any potential collapse of the AI bubble could lead to a 'future market correction' spreading worldwide.

Bailey highlighted the 'volatility' stemming from the fallout of energy supply shocks caused by the US-Iran war and warned that markets remain vulnerable to a potentially disorderly correction that could spread across borders, particularly given fragilities in sovereign debt markets.

The governor emphasized that the issue is not just that investors are borrowing more but that leverage is interacting with high valuations and market concentration, specifically the increasing cross-investment between AI companies and hyper-scalers, which could amplify a future market correction.