Is AI eating up jobs in UK? New report paints bleak picture

Britain is shedding more jobs than it generates due to artificial intelligence (AI) — and at a quicker pace than its global rivals. The substantial advantages for businesses implementing this tech are appearing at a notably steep price for UK staff, straining an already decelerating labour market, Bloomberg reported, citing a Morgan Stanley report.

The UK companies disclosed that AI caused 8% net employment reductions during 2025, according to Morgan Stanley's findings.

This represented the peak figure within a cohort featuring German, US, Japanese, and Australian organisations, and double the global mean.

Vulnerable sectors

The Morgan Stanley report examined businesses utilising AI for a minimum of one year across five vulnerable sectors — retail and consumer goods, property, logistics, medical devices, and motoring. For numerous entities, digital spending is already yielding results.

British firms experienced an average 11.5% productivity gain through AI, with nearly 50% noting even greater improvements. However, their American rivals, who recorded almost identical efficiency growth, generated more positions than they eliminated because of AI.

In Britain, the AI shift arrives exactly as bosses grapple with wage expenses, tepid expansion, and heightened political volatility. Organisations are reducing staff at the quickest rate since 2020 and joblessness is at a nearly five-year peak, as per the latest formal data, as significant minimum-wage hikes and elevated national insurance taxes persist in affecting workforce strategies.

The Morgan Stanley findings indicated that AI prompted UK bosses to eliminate or avoid replacing roughly a quarter of their positions, mirroring counterparts in other nations. Still, the UK organisations were notably less inclined to increase recruitment as a consequence of the tech.

AI has the potential to save Britain’s fiscal position from its stagnant growth trajectory. These prospects have been emphasised by the Bank of England and the Office for Budget Responsibility, with the treasury monitor predicting the tech could raise efficiency growth by up to 0.8 percentage points in the coming 10 years — a surge that would bolster lifestyle quality and state funds.

Formal data released recently indicated job openings across the UK market have dropped by over a third since 2022 — representing half a million positions. One-fifth of that contraction was fuelled by industries most prone to AI influence, including professional, scientific, and tech fields, management services, and computing.

Britain's junior staff are being pressured from two directions, as AI transforms junior office-based roles while Labour’s fiscal plans impact recruitment in commerce and service sectors. Early-career joblessness has climbed faster than the general average, hitting 13.7% in the quarter ending November, the highest level since 2020.