Bank of England Governor Andrew Bailey has identified artificial intelligence as a potential driver of long-term economic growth, comparing its impact to past technological shifts like electricity. Speaking at the University of Leicester, Bailey suggested AI could improve national income and help reverse the UK’s sluggish productivity growth.
Between 2010 and 2019, UK productivity increased by just 0.3% annually, far below the pre-2008 financial crisis average of 2%. This has strained public finances, with expected government spending cuts adding further pressure. Bailey emphasised that maximising AI’s benefits will require investment in workforce skills and infrastructure.
His comments come as businesses watch for signals on interest rate policy. The Bank of England has held rates at a 16-year high of 5.25%, despite inflation falling from 11.1% in October 2022 to 3.4% in February 2025. Lower borrowing costs could provide short-term economic relief, but the Bank remains cautious about premature rate cuts.
AI adoption is expected to reshape industries by automating tasks, improving efficiency, and cutting costs. A 2023 PwC report estimates AI could contribute up to £232bn to the UK economy by 2030, boosting GDP by 10.3%. However, concerns remain over its impact on employment and wage distribution.
