AI Likely to Displace Jobs, Warns Bank of England Governor

Artificial intelligence is set to reshape the labour market in ways comparable to the Industrial Revolution, potentially displacing large numbers of workers unless governments and employers act quickly to prepare, according to the governor of the Bank of England.

Speaking publicly about the rapid adoption of AI across the economy, Andrew Bailey said the technology would inevitably replace some roles while creating new ones. The challenge for the UK, he warned, is ensuring that workers have the education and skills needed to move into emerging jobs rather than being left behind.

Bailey compared the scale of change driven by AI to the upheaval caused by industrialisation in the 18th and 19th centuries, when mechanisation transformed manufacturing, agriculture and urban life. While those changes ultimately led to higher productivity and new industries, they also caused significant disruption for workers whose skills became obsolete.

He said the same pattern could play out again if AI is adopted widely without sufficient preparation. Roles involving routine or repetitive tasks are particularly exposed, as software systems become capable of handling activities once performed by humans. From administrative work to basic data analysis, AI tools are already being integrated into workplaces at pace.

Bailey stressed that the solution is not to resist technological change, but to invest heavily in training and education. He argued that people seeking work would find it “a lot easier” to secure employment if they had skills that allow them to work alongside AI rather than compete with it. These include technical literacy, problem solving, and the ability to apply judgement in complex situations.

The warning comes as businesses across sectors experiment with AI to cut costs and improve efficiency. Employers are increasingly using automated systems for tasks such as customer support, scheduling, content generation and financial analysis. While this can boost productivity, it also reduces the number of roles required to deliver the same output.

One group Bailey singled out as particularly vulnerable is younger workers at the start of their careers. He warned that AI could make it harder for inexperienced professionals to secure entry level roles, which traditionally provide training and exposure to the workplace. If those positions disappear, there is a risk that young people will struggle to gain the experience needed to progress.

Bailey raised the issue during an interview on Today, where he emphasised the importance of early intervention. Without changes to education and hiring practices, he said, the labour market could become more polarised, favouring highly skilled workers while squeezing out those without access to training.

Economists say the concern is well founded. Historically, technological change has tended to eliminate some jobs faster than it creates others, at least in the short term. While new roles eventually emerge, the transition period can be painful, particularly for workers whose skills are closely tied to outdated processes.

There is also a regional dimension. Areas with limited access to training, higher education or digital infrastructure may find it harder to adapt. This could widen existing inequalities between regions and social groups, an issue policymakers are already struggling to address.

Business leaders have offered mixed responses. Some argue that AI will free workers from repetitive tasks, allowing them to focus on higher value activities. Others acknowledge that headcount reductions are part of the economic incentive driving adoption. The reality, analysts suggest, is likely to be uneven, with benefits and costs distributed differently across sectors.

Bailey’s comments reflect a growing consensus among central bankers and policymakers that AI is not just a technological issue, but a macroeconomic one. Labour market disruption affects productivity, wages, inflation and consumer demand, all of which fall within the remit of institutions like the Bank of England.

The UK government has signalled support for AI development, viewing it as a driver of long term growth. However, critics argue that policy has focused more on innovation than on workforce transition. Calls are growing for coordinated action involving employers, educators and regulators to ensure that workers are not left to manage the transition alone.

Some experts have proposed measures such as expanded retraining programmes, lifelong learning accounts and closer collaboration between industry and education providers. Others suggest revisiting how entry level roles are structured, ensuring that young workers still have pathways into skilled employment even as automation increases.

Bailey stopped short of predicting widespread unemployment, but his warning was clear. AI will change the nature of work, and not everyone will benefit automatically. The outcome, he suggested, depends on choices made now about skills, education and inclusion.

As AI systems continue to improve, the pressure on governments and businesses will intensify. The technology promises efficiency and growth, but without investment in people, it also risks deepening inequality. The lesson from history, Bailey implied, is that technological revolutions reward societies that prepare, and punish those that do not.