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Bank of England pours cold water on AI productivity boom
The Bank of England estimates that AI has lifted UK productivity by about 0.5 per cent over the past three years, a modest gain compared with predictions of a rapid economic transformation. It says AI-related activity has contributed to recent growth, but much of this reflects developing and installing the technology rather than wider productivity improvements from using it.
The Bank estimates AI-related activity accounted for just under a fifth of UK GDP growth since the start of 2026. Productivity in AI-heavy sectors has improved but remains below pre-pandemic averages, while firms report little overall effect on employment so far, though some are less inclined to hire or replace departing staff. The report also notes that demand for AI products such as memory chips is raising import costs for Britain.
In short
- AI has added only modestly to UK productivity so far.
- AI activity made up just under a fifth of GDP growth since early 2026.
- Chip demand is pushing up import costs for Britain.
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The case for
The Bank’s estimate suggests AI is already making a measurable contribution, and the gains may grow as businesses move from installing the technology to using it across their operations. If AI helps firms produce more with the same resources, it could support growth and eventually ease pressure on prices, even if the benefits take time to appear.
The case against
A productivity gain of about 0.5 per cent over three years is modest, and activity building AI systems does not by itself show that the wider economy is becoming more efficient. Productivity in AI-heavy sectors remains below pre-pandemic averages, while higher import costs and limited employment effects so far leave open whether the technology will deliver broad, lasting benefits.