Bank of England Chief Hails AI as a Potential Economic Game-Changer
Bank of England Governor Andrew Bailey compared the potential impact of artificial intelligence (AI) on the economy to that of electricity during the early 20th century, as reported by Reuters. Speaking at the University of Leicester, Bailey described AI as a transformative technology capable of lowering costs, fostering innovation, and enhancing productivity.
Bailey said, "AI appears to me to have that potential, and so it could over time lift growth rates and per capita national income.”
Struggling Growth and Fiscal Constraints
Reuters reports that, like many other advanced economies, Bailey’s remarks come as Britain faces sluggish economic growth, particularly since the global financial crisis 2007 08. The prolonged stagnation has placed added pressure on government finances, with British finance minister Rachel Reeves expected to announce spending cuts later this week to address growing fiscal challenges.
Demographics Heighten Need for Tech Adoption
Bailey highlighted the aging populations in many parts of the world as a key reason to accelerate technological adoption. He pointed to AI as a general-purpose technology with the potential to drive sustained growth but stressed that investment in human capital and skill development would be essential for societies to benefit from it.
"We must facilitate the growth of AI as the most likely general purpose technology which can move the needle on growth in the economy," he said, urging a proactive approach to integrating AI across industries.
Also read: Meta Faces Lawsuit Over AI Training with Copyrighted Books
Call for Multilateral Trade Cooperation
In addition to his comments on AI, Bailey also addressed concerns over global trade tensions, emphasizing the need for international cooperation. He criticized rising protectionist policies, particularly those from the US President Donald Trump, which he said were straining the global trading system.
He added, "These two points - domestic macroeconomic forces and trade policy - are not incompatible. They sit together. So to solve these issues we need authorities to come together and strengthen the rules of engagement in a multilateral setting rather than set tariffs bilaterally."
