The UK is losing more jobs than it creates due to artificial intelligence, and at a faster pace than its international peers, according to a Morgan Stanley study cited by Bloomberg. The research shows that productivity gains from AI adoption come with a particularly high cost for UK workers, at a time when the labour market is already under strain.
UK companies reported net job losses of 8% over the past 12 months as a result of AI, the highest figure among firms surveyed in Germany, the US, Japan, and Australia, and twice the international average. The study focused on companies that have used AI for at least one year across five exposed industries: consumer goods and retail, real estate, transport, medical equipment, and automotive.
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Higher productivity, fewer hires
British firms recorded an average productivity increase of 11.5% thanks to AI, broadly in line with US companies. However, the employment impact differs sharply. While US firms created more jobs than they cut, UK companies reduced headcount.
Economic conditions intensify the effect, with high labour costs, weak growth, and political uncertainty. Official data show unemployment at a five-year high, while companies are cutting jobs at the fastest rate since 2020. Bloomberg analysis indicates that AI-exposed roles such as software development and consulting have seen a 37% drop in job postings since 2022, compared with 26% in other sectors.
“Rising hiring costs are pushing more small businesses to use AI and outsourcing to fill roles traditionally held by local workers, who are now losing these opportunities,” said Justin Moy, managing director at EHF Mortgages.
Although AI could support the UK economy over the longer term—potentially boosting productivity by up to 0.8 percentage points over the next decade—the immediate pressure falls on younger workers and administrative roles. Youth unemployment has climbed to 13.7%, the highest level since 2020.
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