Bank of England boss issues stark warning on AI threat to UK economy

Bank of England boss issues stark warning on AI threat to UK economy Governor Andrew Bailey said the technology could be a ‘very powerful weapon’ in the wrong hands - Bookmark - CommentsGo to comments Become an Independent member to bookmark this article Already a member? Log in The UK needs to be prepared for financial market shocks as a result of artificial intelligence (AI) and must ensure the system is “resilient”, the governor of the Bank of England has warned. Andrew Bailey cautioned that “not everybody always wins” when questioned about the hundreds of billions currently being invested in the AI sector, and warned that the technology could be a “potentially very powerful weapon” in the wrong hands. Asked what the risks and benefits could be to the UK, Mr Bailey said it had “great potential to strengthen growth in our economies”, as the market values some AI firms as multi-trillion pound businesses. AI chipmaker Nvidia currently has a market valuation of $5.5tn (£4.14tn) due to enormous investments by those who believe in the future of the technology, while tech giants such as Meta, Microsoft, and Amazon are investing significant funds to develop their own models. Two of the largest AI companies, Anthropic and OpenAI, are also preparing to float shares on the US stock markets, in a move likely to raise them hundreds of billions of dollars more in investments. Just this week, OpenAI’s chief executive Sam Altman delayed the launch of the company’s latest model due to safety issues that had occurred during internal testing. The firm has faced intense scrutiny since July, after its AI agent hacked into the AI platform Hugging Face without being prompted, and accessed non-public information within the Australian government. The company is likely to be listed on the stock market in 2027, with Mr Altman reiterating his decision for OpenAI to not make a highly anticipated stock market debut until it can "make confident safety decisions". Mr Bailey told the BBC that AI has created a "much more powerful way of uncovering vulnerabilities". "It's revealing things that have been in bits of operating software that we've had, and all of us have had." "In the wrong hands... it's a very powerful, potentially very powerful, weapon," he added. Mr Bailey himself was the subject of recent deepfake images created by AI, which depicted him and Reform UK leader Nigel Farage engaging in a fist fight. He said the bank had struggled to find the origin of the images, which circulated on X. He continued: "There is a large, very large, amount of investment going into this sector now, and of course that's natural because it's a major area of growth. "And of course you see that the asset prices of the companies that are developing it have gone up a lot and that reflects the fact that there are high expectations of what it can deliver." "Everybody is currently priced to be a winner," he added, but warned that "you look back at the past, not everybody is a winner". "Google was not the first market leader in internet search. It was Netscape. Nobody can remember Netscape today. It doesn't exist. So not everybody always wins. "We are prepared for the fact that there will be, I think, some shocks come along to markets and we have to deal with that. We have to make sure the system is resilient." Join our commenting forum Join thought-provoking conversations, follow other Independent readers and see their replies Comments [Image text:] Pank ef Englent Bonkof England England