Bank of England Governor Warns of Global Economic Downturn Risk from AI Bubble

The governor of the Bank of England has sent a warning to G20 finance ministers that artificial intelligence could trigger a major international financial downturn.

Andrew Bailey, in his capacity as chairman of the Financial Stability Board, cautioned that any potential collapse of the AI bubble could lead to a 'future market correction' spreading worldwide.

He highlighted the 'volatility' stemming from the fallout of energy supply shocks caused by the US-Iran war and the fragilities in sovereign debt markets.

The issue is not just that investors are borrowing more, but that leverage is interacting with high valuations and market concentration, particularly between AI companies and hyper scalers.