The United Kingdom is losing more jobs than it is creating because of artificial intelligence, with the impact proving sharper than in other major economies, according to new research by investment bank Morgan Stanley.
The study, shared with Bloomberg, shows British firms reporting a net decline in employment over the past year as AI adoption accelerates, with workforce numbers falling by an average of 8%. This represents the largest net job loss among comparable economies, including the United States, Germany, Japan and Australia.
Productivity Rises but Jobs Disappear
Morgan Stanley surveyed companies across five sectors – consumer goods and retail, real estate, transport, healthcare equipment and automotive manufacturing – all of which have been using AI systems for at least a year.
UK firms reported productivity gains of around 11.5% due to automation and AI-driven efficiencies, broadly in line with US companies. However, while American businesses used those gains to expand employment, British companies cut more roles than they created, indicating that efficiency improvements are translating into cost-cutting rather than workforce growth.
Pressure on Hiring
The findings come as the UK labour market faces growing strain. Unemployment has risen to its highest level in four years, while higher minimum wages and increased employer National Insurance contributions have made firms more cautious about taking on staff.
The study suggests AI is intensifying these pressures, with businesses most likely to reduce entry-level and early-career roles requiring two to five years’ experience – positions traditionally used to build professional careers in sectors such as finance, marketing, law and technology.
Rising Anxiety Among Workers
Concerns about job security are spreading. A recent survey by recruitment group Randstad found that more than a quarter of UK workers fear their roles could disappear entirely within five years because of AI. Younger employees, particularly Generation Z, expressed the highest levels of anxiety, while older workers approaching retirement were more confident about their ability to adapt.
London Mayor Sadiq Khan warned earlier this month that AI could eliminate large numbers of white-collar jobs in the capital, where employment is heavily concentrated in finance, creative industries and professional services. Speaking in his Mansion House address, he said the city was “at the sharpest edge of technological change” and called for urgent action to create new roles to replace those being lost.
Global Warnings on Displacement
International leaders have echoed similar concerns. At the World Economic Forum in Davos, JP Morgan chief executive Jamie Dimon said governments and businesses must prepare for widespread displacement caused by AI or risk social and economic instability.
Experts say the UK now faces a crucial policy challenge: ensuring that productivity gains from artificial intelligence translate into new, high-quality jobs rather than accelerating long-term unemployment, particularly for younger workers entering the labour market.