As artificial intelligence (AI) cements its place in daily life and business, the United Kingdom is grappling with a wave of disruption that echoes the seismic shifts of the Industrial Revolution. The warning comes from none other than Andrew Bailey, Governor of the Bank of England, who, on December 19, 2025, offered his most pointed assessment yet of AI’s impact on the jobs market—and the economy at large.
Speaking on BBC Radio 4’s Today programme, Bailey drew a direct line from the technological anxieties of Queen Elizabeth I’s era to the present day. “As you saw in the Industrial Revolution, now over time, I think we can now sort of look back and say it didn’t cause mass unemployment, but it did displace people from jobs and this is important. My guess would be that it’s most likely that AI may well have a similar effect. So we need to be prepared for that, in a sense,” he said, as reported by BBC and The Independent.
This sense of urgency is not idle speculation. Official figures released in December 2025 reveal that UK unemployment has risen to 5.1% in the three months to October, with 85,000 more young people aged 18 to 24 joining the ranks of the jobless—the largest such increase since November 2022, according to the Office for National Statistics. Entry-level roles in law, accountancy, and administration are particularly vulnerable, with AI already automating tasks that once kept armies of junior staff busy.
It’s not just blue-collar workers feeling the pinch. Microsoft’s analysis of more than 200,000 interactions with its Copilot generative AI chatbot found that interpreters and translators are at the highest risk, with 98% of their work activities overlapping with AI-driven tasks. Historians, mathematicians, writers, and journalists aren’t far behind, with overlap figures ranging from 81% to 91%. The message is clear: even highly educated professionals are not immune to the AI revolution.
Andrew Bailey is adamant that the UK must act swiftly to mitigate the fallout. “It would likely be a lot easier for people looking for employment to secure a job if they had training, education, [and] skills around AI in place,” he stressed. The governor underscored the importance of preparing workers for a new era, where collaborating with AI is not just an advantage but a necessity. “We do have to think about, what is it doing to the pipeline of people? Is it changing it or not?” Bailey mused. “I think if it’s people working with AI, I’m not sure it will change the pipeline, but I think we’re right to have an eye on that point.”
The effects are already rippling through the corporate world. Mohamed Kande, global chairman of accountancy giant PwC, told the BBC that his firm is scaling back hiring plans due to AI’s growing capabilities. “Now we have artificial intelligence. We want to hire, but I don’t know if it’s going to be the same level of people that we hire—it will be a different set of people,” Kande said. Where once PwC consultants would sift through mountains of data and documents, AI models now complete the same work in minutes, slashing both costs and demand for junior staff.
The situation is especially grim for young, inexperienced professionals. Bailey warned that the pipeline of talent—the steady flow of workers climbing the ladder to senior roles—could be disrupted if entry-level opportunities dry up. “There is an issue with younger, inexperienced professionals finding it difficult to secure entry-level roles due to AI,” he acknowledged. The challenge is compounded by rising minimum wages and increased employer taxes, which some argue make it less appealing for businesses to hire entry-level staff.
Yet, amid the warnings, Bailey sees a silver lining. He described AI as the “most likely source of the next leg up” for UK economic growth, citing its “substantial” potential to improve productivity. “In terms of its potential to improve productivity growth, I think it’s pretty substantial. It will get used across the economy. How quickly it comes through is another question, history would suggest that it does take some time,” Bailey explained. The Bank of England itself is experimenting with AI, though Bailey admits that mainstream adoption will not happen overnight. “To get it into sort of mainstream, everyday use will take some time, but it’s critically important that we obviously focus on getting the pre-conditions and all the conditions in place for that to happen.”
But the promise of productivity gains comes with a cautionary note about financial markets. The Bank of England recently sounded the alarm over a potential AI bubble, warning that the soaring valuations of tech firms could lead to a crash reminiscent of the dotcom bust. Jamie Dimon, CEO of JP Morgan, echoed these concerns in October, telling the BBC he was “far more worried than others” about the risk of a serious market correction in the coming years. Bailey said policymakers “have to watch the valuation question,” noting, “Of course, it’s still the case that it doesn’t mean they’ll all be winners. We’re watching it very closely, because we do need to watch, obviously, what the consequences of any sharp unwinding could be.”
Economic data paints a mixed picture. The Bank of England’s Monetary Policy Committee voted narrowly—five to four—to reduce the benchmark interest rate by 0.25 percentage points to 4%, the lowest in nearly three years, though still almost double the European Central Bank’s rate. The decision came after inflation unexpectedly dropped to 3.2% and new forecasts showed the economy stagnating in late 2025. Sterling rose nearly half a cent against the US dollar on the news, and two-year gilt yields climbed as investors digested the Bank’s cautious tone about future cuts. Yet, British inflation remains the highest among the Group of Seven economies, partly due to increased employer taxes introduced in November 2025 by finance minister Rachel Reeves. The Bank now expects zero economic growth in the last three months of 2025, down from a previous forecast of 0.3%.
The split among policymakers is deep. Deputy governor Clare Lombardelli, who voted against the rate cut, said she remained concerned about inflation proving stronger than expected. Chief economist Huw Pill added that he saw a bigger risk of inflation getting stuck too high than too low. Yael Selfin, chief economist at KPMG UK, told Reuters, “As a result, we expect only two interest rate cuts in 2026, taking rates down to 3.25 per cent.”
As the UK stands at the crossroads of technological innovation and economic uncertainty, Bailey’s words ring with a sense of both caution and hope. The AI revolution, like those before it, will not be painless—but with the right preparation, it could propel the nation toward a more productive future.
