TL;DR

British companies report the highest net job losses from AI among major economies, according to Morgan Stanley research. The UK saw an 8% reduction in jobs despite similar productivity gains to the US, which created more jobs than it cut.

The UK Disparity

The Morgan Stanley study surveyed companies using AI for at least a year across consumer retail, real estate, transport, healthcare equipment, and automotive industries in five countries: the UK, US, Japan, Germany, and Australia.

British businesses reported an average 11.5% increase in productivity from AI—comparable to US gains. However, the job outcomes diverged sharply: whilst US companies created more jobs than they eliminated, UK firms reported net reductions.

This comes as unemployment reaches a four-year high, with rises in minimum wage and employer national insurance contributions adding pressure to the hiring environment.

Early-Career Workers Most Affected

The businesses surveyed said they were most likely to cut early-career positions requiring two to five years of experience. This aligns with warnings from London Mayor Sadiq Khan, who recently cautioned that AI could “usher in a new era of mass unemployment” in the capital.

Khan noted London is “at the sharpest edge of change” due to its concentration of white-collar workers in finance, creative industries, and professional services—sectors where AI capabilities are advancing rapidly.

More than a quarter of UK workers now worry their jobs could disappear completely within five years due to AI, according to recruitment firm Randstad. Younger workers, particularly Gen Z, express the greatest concern about their ability to adapt.

Looking Forward

JP Morgan CEO Jamie Dimon warned at Davos last week that governments and businesses would need to help workers displaced by AI or risk civil unrest. The UK data suggests this challenge may be more immediate here than elsewhere, raising questions about whether current policy responses are adequate.