British workers are facing significant job losses due to artificial intelligence (AI), with research indicating that companies in the UK are cutting positions at twice the international average. According to a study conducted by Morgan Stanley and shared with Bloomberg, UK firms reported an average of 8 percent net job losses over the past year, surpassing the 4 percent average observed in other major economies, including the United States, Germany, Japan, and Australia.
The research, led by Rachel Fletcher, the London-based head of EMEA Sustainability Research at Morgan Stanley, surveyed firms across five industries: consumer staples and retail, real estate, transport, healthcare equipment, and automobiles. These companies have been using AI for at least one year. While UK firms achieved an average productivity increase of 11.5 percent from AI, nearly half reported even greater gains. In comparison, American companies experienced similar productivity improvements while managing to create more jobs than they eliminated.
Fletcher characterized the findings as an “early warning sign” of the impact AI is having on the labour market. She noted that discussions around AI’s employment effects have surfaced frequently in investor conversations. The report revealed that approximately a quarter of roles were either cut or not backfilled by UK employers due to the influence of AI, aligning with trends observed internationally. However, British firms were significantly less inclined to increase hiring as a result of the technology.
Young workers are particularly affected by these trends, facing challenges from the disruption of entry-level positions and tax policies that impact hiring in retail and hospitality sectors. Youth unemployment reached 13.7 percent in the three months ending in November 2023, marking the highest rate since 2020.
The rise of AI coincides with ongoing struggles for British employers, who are dealing with rising payroll costs, slow economic growth, and political instability. Official statistics indicate that companies are cutting jobs at the fastest rate since 2020, with unemployment reaching near five-year highs. Factors such as increasing minimum wages and higher national insurance contributions are further complicating staffing strategies.
As the AI revolution continues to unfold, the implications for the UK labour market are becoming increasingly pronounced. The findings from Morgan Stanley highlight the urgent need for policies that address the challenges posed by this technological transformation, particularly for vulnerable groups such as young workers.
