Bank of England Warns AI Could Trigger Global Economic Downturn

Bank of England governor Andrew Bailey has sounded the alarm on artificial intelligence, warning that its potential could lead to a global economic downturn. This comes as Chancellor John Healey announced a £100 million fund aimed at backing British AI start-ups.

In a letter to G20 finance ministers in North Carolina, US, Bailey expressed concerns about the increasing volatility caused by the aftermath of the US-Iran war. He noted that markets remain vulnerable to a potentially disorderly correction that could spread across borders.

Bailey's warning is centered around the high valuations and market concentration of AI companies and hyper-scalers, which he believes could amplify a future market correction. He remains concerned that a large shock or combination of shocks could concurrently trigger multiple vulnerabilities.