UK — The Register
Bank of England pours cold water on AI productivity boom
AI1 min read
The Bank of England says AI has so far done little to boost UK productivity, meaning how much work the economy gets done per worker. Most of AI's effect on growth comes from companies that build AI, not from firms that use it.
What happened
The Bank of England, the UK's central bank, said in its latest Monetary Policy Report that AI has added only a small amount to UK productivity. Despite huge spending on AI, the Bank found little real gain for UK businesses so far.
Key numbers
- AI has raised UK productivity by an estimated 0.5% over the past three years.
- That adds only 0.1 to 0.2 percentage points to yearly productivity growth since early 2024.
- AI-related activity made up just under a fifth of UK GDP growth since the start of 2026.
- A Gartner survey found only 3% of organizations had hit their AI targets, while 38% were over budget.
- A study of nearly 6,000 executives found more than 80% of firms saw no clear effect from AI on jobs or productivity.
Some background
Productivity is how much output a worker or business makes for the same effort. Many people hoped AI would make work faster and cheaper. The Bank says much of the recent rise in productivity comes from firms hiring fewer workers while output keeps growing, not from AI itself.
Why it matters
If AI does not raise productivity, the huge spending on it may not pay off for investors or the wider economy. The IMF and the Bank for International Settlements have both warned that the spending could be a bubble, similar to the dotcom boom of the 1990s.
What to watch
- Whether the Bank's future reports show AI boosting productivity more strongly.
- Whether companies that use AI, not just those that build it, start to see real gains.
- Whether firms keep raising AI spending even when returns stay low.
- Whether watchdogs like the IMF take stronger steps if AI profits do not appear.
Glossary
- Bank of England
- The central bank of the United Kingdom. It sets interest rates and watches over the economy.
- Monetary Policy Report
- A regular report from the Bank of England about the economy, inflation, and interest rates.
- GDP
- Gross domestic product, the total value of goods and services a country makes in a set time.
- Gartner
- A research company that surveys businesses about technology trends.