AI DRIVES MORE NET JOB LOSSES IN UK THAN OTHER BIG ECONOMIES: STUDY

Mon 26 January 2026:

Artificial intelligence resulted in 8% net job losses in the UK over the past 12 months, the highest rate among other leading economies, according to a new study shared with Bloomberg.

Research by the investment bank Morgan Stanley said the UK is losing more jobs than it is creating due to AI effect, and is being affected more negatively than other big economies including the US, Japan, and Germany.

It surveyed companies using AI for at least a year across five industries: consumer staples and retail, real estate, transport, healthcare equipment and cars.

The result showed that British companies reported an average 11.5% increase in productivity aided by AI, although US businesses reported similar gains, but created more jobs than they cut.

The study said British workers are being disproportionately affected by the rise of AI, with higher costs and taxes also weighing on the job market.

The businesses surveyed by Morgan Stanley reported that they were most likely to cut early-career jobs, requiring two to five years of experience in the UK.

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Morgan Stanley looked at companies that have been using AI for at least a year. They focused on five industries including consumer staples and retail, real estate, transport, health-care equipment, and automobiles. For many of these firms, the investment is already paying dividends.

The timing couldn’t be worse for Britain. Businesses are already dealing with expensive payroll costs, barely-there growth, and shaky politics. They’re cutting jobs faster than any time since 2020. Unemployment is approaching a five-year high. Big jumps in minimum wage and national insurance contributions keep forcing companies to rethink their staffing.

Right now, though, people are more focused on how AI is making the UK’s job crisis worse. Young people and white-collar workers are getting hit especially hard.

Job openings across the economy have fallen more than a third since 2022. That’s half a million positions gone. A fifth of that drop came from sectors where AI is making the biggest impact, professional, scientific and technical work, administrative services, and IT.

AI is wiping out entry-level office jobs while Labour’s tax policies are making retail and hospitality employers think twice about hiring. Youth unemployment has climbed faster than the overall rate, reaching 13.7% in the three months through November. That’s the highest it’s been since 2020.

Bank of England Governor Andrew Bailey calls AI the next “general purpose technology”, something as transformative as computers or the internet before it. But he warned last month that the UK needs to get ready for the job losses AI will cause. He also pointed out that the technology could mess with how workers usually climb the ladder into senior roles.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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