How will increasing business use of artificial intelligence (AI) affect UK labour demand?

A survey of Bank of England agency contacts in Autumn 2023 found that many UK businesses are investing in Artificial Intelligence (AI) and expect to see productivity gains within 2-3 years. The use of AI is expected to be widespread, with applications in various industries such as business services, finance, law, and accountancy. While some businesses have already experienced immediate productivity gains, others expect to see benefits over a longer period as AI technology is integrated with existing systems. Key Findings: Over 30% of surveyed agency business contacts have made significant or transformative AI investments in the UK, with plans to make further investments in the future. AI adoption is expected to be higher than suggested by the Autumn 2023 agency investment intentions survey, with companies increasingly using off-the-shelf AI-powered solutions. AI use is expected to automate routine and repetitive tasks, optimize business operations, and improve customer service. Despite expected productivity gains, few businesses expect AI adoption to significantly reduce their labour demand imminently, with impacts likely to come over coming years. Integration of AI technologies will take time, with companies needing to upgrade their data and technology infrastructure, and workers needing to learn and adjust to using AI effectively. Conclusion:* The adoption of AI in UK businesses is expected to have significant implications for labour demand, but the timing and size of these impacts remain uncertain. As AI technologies continue to advance, companies, their customers, and regulators will need to agree on their risk tolerances for AI use.