UK's BoE: AI Boosts Productivity but Hurts Employment

According to an analysis by the Bank of England, productivity among UK businesses developing and using AI is rising, but this growth comes at the cost of employment. Bank of England staff noted in a blog post that software and IT consulting firms have increased their contribution to annual productivity growth tenfold compared to the decade before the pandemic, contributing 0.1 percentage points between 2023 and 2025. Meanwhile, information services providers have shifted from being a drag on productivity to a driving force during this period. The Bank of England found that productivity among firms adopting AI has also been steadily improving, particularly in industries such as office administration and business services, where repetitive tasks—like scheduling meetings or processing invoices—are well suited for automation. However, gains in labor productivity have come at least partly at the expense of reduced employment opportunities. Another Bank of England blog post revealed that over the past three years, job vacancies in occupations most affected by AI have declined by 15%, while those in moderately affected and less affected occupations have decreased by 10% and 6%, respectively. Customer service and administrative roles have been especially vulnerable to AI, with job vacancies in these categories dropping by more than 20%. (Finances Online)