Callum Hill from London, who was recently laid off by a UK fintech company, said: “I used to do Dry January because it’s a trend and has health benefits. But now that I am unemployed, I feel like this is primarily a financial necessity.”
This line is a bit trite, but it captures the deeper shift that’s taking place on labour markets. Artificial intelligence is not a threat to be discussed in boardrooms.
The accelerated job cuts are occurring across industries such as technology, finance and media, while executives and investors tout the productivity gains.
Companies from London to Seattle are becoming more explicit about how AI plays a role in reducing payrolls. This gives a glimpse into the way the labour market could adjust to the most rapid technological change in history.
Data is beginning to reveal the scale and pace of change.
Morgan Stanley’s new research suggests that Britain has already experienced more job losses due to AI adoption than any other major economy. The bank calls this a “early warning signal” for the global labour market.
AI has become a strategic priority for many companies, including Amazon, Meta and UPS. Citigroup and Citigroup are also laying off employees.
Britain as a stress test
Morgan Stanley’s study surveyed companies who have been using AI for at least one year in five different sectors: real estate, transportation, healthcare equipment, and consumer staples.
British companies reported that AI has boosted their productivity by an average of 11.5%, which is in line with the US, Germany and Australia.
The employment outcome is what makes the UK unique.
British companies reported net job loss of 8% in the last year. This is the highest rate of all the countries surveyed, and almost double the average international rate.
US firms reported similar productivity gains, while creating more jobs.
Data suggests that, while AI has prompted companies to cut or freeze a quarter of their roles globally, British employers have been significantly less likely than other employers to increase hiring.
This results in a net decrease in employment, especially in roles that require two to five year’s experience in the early stages of a career.
Rachel Fletcher said that the findings of the report had been repeatedly discussed in recent investor discussions.
She said that they were an early sign of how AI might disrupt the labour market more widely as adoption spreads.
The UK squeeze: Costs, policies and the UK squeeze
AI’s impact on Britain is being felt against a backdrop of a challenging economic climate.
The minimum wage is increasing, and employers are facing higher taxes.
Official figures reveal that companies are reducing jobs at the highest rate in six-years, and unemployment is close to a five year high.
According to the Office for National Statistics, the number of vacancies has fallen by over a third, or around 500,000 positions, since 2022.
Around a fifth has come from the sectors that are likely to be affected, such as IT, professional, administrative, and scientific services.
Automation and rising costs can explain why productivity gains do not translate into new hires.
Instead of redeploying employees into new roles, it appears that firms are banking on efficiency gains to offset increasing expenses, amplifying the job losses in short-term.
Corporate America invests in efficiency
This pattern is not unique to Britain. In the US, businesses are increasingly tying workforce reductions with AI-driven efficiency.
Amazon announced plans to reduce 16,000 corporate positions. The latest round affects roles in Amazon Web Services (AWS), retail, Prime Video, and human resources.
In an internal email sent by senior vice-president Colleen Ausbrey and accidentally circulated, the emails described the cuts in terms of a longstanding effort to remove bureaucracy, reduce layers and increase ownership.
Amazon is not the only retailer.
United Parcel Service has announced a major restructuring plan that could result in up to 30,000 job losses this year. This is a direct result of the increasing costs associated with its separation from Amazon, as the competition on the US delivery market intensifies.
Microsoft will cut 15,000 jobs by 2025 after Satya Nadella, the chief executive of Microsoft, said that AI wrote 20% to 30% or its code.
Marc Benioff, Salesforce’s CEO, said that AI agents handle about half of all customer interactions. This has allowed the company to reduce their customer service workforce from 9,000 employees to 5,000.
Arvind Krishna, IBM’s chief executive, confirmed that AI chatbots have replaced hundreds of HR roles despite an increase in employment in other areas.
Sebastian Siemiatkowski, a spokesperson for Klarna, has been blunter in his remarks. He said that the fintech company had cut its workforce by around 40% as AI was taking over previously performed tasks.
Follow the lead of finance, media and industry
The AI-related cuts are spreading outside Silicon Valley.
Citigroup will eliminate about 1,000 positions this week, as part of an overall plan to reduce 20,000 roles before the end of 2026.
The bank cites efficiencies gained by technology along with its strategic overhaul, under the leadership of chief executive Jane Fraser.
BlackRock, world’s biggest asset manager, will cut about 250 jobs to reshape its business after acquiring private credit specialist HPS Investment Partners.
Meta Platforms will lay off approximately 10% of its Reality Labs employees, re-directing resources to artificial intelligence in the face of increasing competition.
ASML, a chipmaking equipment company in Europe, is cutting 1,700 positions, mainly in R&D leadership. This comes as record orders from AI-focused clients are driving the demand.
Pinterest will reduce its workforce by less than 15% as it reallocates staff to AI-focused positions, but investor reactions have been cautious.
Morgan Stanley estimates more than 200,000 European bank jobs could be lost by 2030, as lenders automate their back-office functions and risk management.
Executives are attracted by the projected gains in efficiency of up to 30 percent, but social consequences are harder to ignore.
Worker anxiety increases
According to surveys, anxiety is increasing faster than layoffs would suggest.
Randstad found that more than 25 percent of UK workers are concerned about their jobs disappearing completely in the next five to ten years because of AI. The concern is highest among young workers.
In Mercer’s Global Talent Trends Report, 40% of employees feared losing their job to AI in 2024. This is up from 28%.
AI is credited with nearly 55,000 job losses in the US by Challenger, Gray & Christmas, a consulting firm.
The Massachusetts Institute of Technology found that AI can already perform tasks in finance, healthcare, and professional services, saving up to $1.2 trillion on wages.
Some economists warn against exaggerating the immediate impact of AI.
The Yale University Budget Lab found that there was little evidence of AI-driven job loss in US labour market statistics between 2022-2025. This suggests that many companies are using AI to cover up cuts caused by other factors.
AI creators’ warnings
Dario Amodei, the chief executive of Anthropic, has been one of the loudest voices in highlighting risks.
He warned that AI may destroy half of white-collar positions, which would trigger what he called an “unusually painful shock” to the labour market.
Amodei wrote a long essay in which he argued that AI can act as a substitute for humans across multiple industries at the same time because of its cognitive breadth.
He wrote that unlike previous technological revolutions the speed and scope of AI could overwhelm society’s ability to adapt.
He called for the government to intervene, including progressive taxes on AI firms, in order to manage the transition.
Other industry members disagree. Nvidia’s chief executive Jensen Huang said AI would create high-paying job opportunities in construction, manufacturing, and infrastructure. This includes building chip factories and data centers.
Jamie Dimon, a JPMorgan executive, has said that governments should put more emphasis on local support and retraining to assist workers in their transition.
Politics catches up
The debate has become more political. The debate is becoming more political.
Morgan Stanley’s findings contradict this narrative and suggest that the near-term adjustments may be more severe than expected.
London Mayor Sadiq Khan warned that AI could eliminate a large number of jobs in London, and policymakers from Europe and the US are grappling with how to regulate AI while not stifling innovative ideas.
There is a risk that the labour market will adjust faster than social safety networks or retraining programs can react.
The turning point in work
The data and disclosures of corporations do not tell a singular story of technological advancement or destruction but rather a complex transformation marked by uneven results.
AI delivers real productivity gains but these gains aren’t shared equally across workers, industries or countries.
The British experience shows that policy and cost choices can amplify AI’s disruptive effect, resulting in job losses instead of redeployment.
At least for the moment, the US economy appears to be able to absorb the shock, thanks to its stronger growth and flexible labour markets.
AI is a powerful tool for companies to reduce costs and increase margins.
It introduces uncertainty to workers at a speed few have ever experienced. For governments, this is a test to see if they can keep up with the technology that is changing work faster than their institutions can adapt.
It is not a question of whether AI will affect the labor market but rather how painful the transition will be and who will pay the price.
This post AI-driven Job Cuts Accelerate Globally as UK Becomes Early Warning may be updated as new developments unfold.
