Bank of England Governor Andrew Bailey Advocates for AI as Key to UK Economic Growth Amidst Inflation Concerns

Bank of England Governor Andrew Bailey has identified artificial intelligence (AI) as a crucial driver for economic growth in the UK, comparing its potential impact to that of electricity. Speaking at the University of Leicester, Bailey stated that AI could boost long-term growth rates and improve national income, addressing the UK's sluggish economic performance since the 2008 financial crisis. Bailey emphasized that investment in workforce skills is essential to maximize the benefits of AI, which he sees as a general-purpose technology capable of significantly impacting the economy. His comments come as the Bank of England maintains a tight monetary policy, with interest rates at a 16-year high of 5.25% to combat inflation. Despite inflation moderating to 3.4% in February 2025, policymakers remain cautious about lowering rates, and Bailey's focus on AI reflects a broader search for long-term economic solutions beyond monetary policy. AI adoption is projected to add up to £232 billion to the UK economy by 2030, increasing GDP by 10.3%, according to a 2023 PwC report.