North carolina: Artificial intelligence could unleash a global economic downturn, the governor of the Bank of England has warned in a letter to governments from around the world, reported PA Media/dpa. Andrew Bailey said that a future market correction could spread across the world if the AI bubble bursts, in a letter to G20 finance ministers who are currently meeting in North Carolina in the United States.
According to Nam News Network, Bailey warned in his letter of the volatility caused by the impact of energy shocks from the US-Iran war. Writing in his capacity as chairman of the Financial Stability Board, an international watchdog, he stated that markets remain vulnerable to a potentially disorderly correction that could spread across borders, particularly given fragilities in sovereign debt markets.
He added that the issue is not simply that investors are borrowing more, but that leverage is interacting with high valuations and market concentration, especially the increasing cross-investment between artificial intelligence (AI) companies and hyper scalers, in a way that could amplify a future market correction. Bailey expressed concern that a large shock or combination of shocks could concurrently trigger multiple vulnerabilities.
Bailey's warning comes as Chancellor John Healey announced a £100 million (US$135.44 million) fund aimed at backing British AI start-ups. The fund is part of the UK government's efforts to grow the country's so-called Sovereign AI capacity, homegrown AI technology aimed at ensuring the UK is not dependent on services and infrastructure developed abroad.
Ministers want to see companies compete for the funding to help tackle challenges like cutting waiting lists in the NHS and improving patient care, as well as bolstering cybersecurity and defense. Healey stated that Britain is home to some of the most innovative AI companies in the world, and this government is backing them to start, scale and succeed here in the UK. He emphasized that this first-of-its-kind competition will help ensure more of the benefits of AI are felt in every UK postcode.
As G20 countries seek to make the most of AI opportunities, Healey is determined that Britain has a lead role in harnessing this technology to drive more jobs, better public services, and growth that's UK-wide.