UK Productivity Hikes with AI, But Jobs Take the Hit

The Bank of England (BOE) has found that British firms using artificial intelligence (AI) have increased their productivity, but at the cost of job opportunities. According to BOE analysis, software and IT consulting firms saw a tenfold increase in their contribution to annual productivity growth from 2023-2025, contributing 0.1 percentage point. This is a significant shift compared to the decade before Covid.

The report also found that information-service providers, which were previously a drag on productivity, are now driving it forward. Firms adopting AI in sectors like office administrative and business services have seen increased productivity, particularly in tasks such as scheduling meetings or processing invoices, where repetitive tasks can be automated.

However, the analysis also reveals that job opportunities have decreased in industries exposed to AI. Vacancies in customer service and administrative roles, which are highly vulnerable to automation, fell by over 20% over the past three years. BOE Governor Andrew Bailey notes that AI's effect on productivity will likely follow a J-curve, taking time for businesses to learn how to use it effectively.