Millions of jobs in some of the most important sectors to the UK economy are at risk of being replaced by AI, according to OBR analysis.
Buried deep in the documents published as part of the budget process, estimates show that the financial, insurance and professional services industries are some of the most at risk of being automated.
More than two million jobs could potentially be “substituted” with AI across the sectors in the next 10 years, the Office for Budget Responsibility assessment suggested.
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These sectors contain some of the biggest UK employers, and also the most lucrative for workers, business and the taxman, and the government’s industrial strategy singled them out as key areas for UK growth.
The work by the OBR does not paint a completely bleak picture – suggesting that AI will add to productivity in the years to come, with the UK 0.2% more productive due to AI by the end of the decade.
The analysis prepared by the watchdog modelled how different industries might be impacted by AI – breaking jobs down into two categories: substituted and complemented.
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Roles that could be substituted by AI are those where the tasks “could be fully automated without the need for human involvement”.
Those that could be complemented are those where “AI will help people carry out these tasks more efficiently rather than replacing them”.
This analysis – which for fans of irony included the use of large language model AIs in its preparation – highlighted the risks.
It found that in the next decade, 1.3 million jobs in professional services and 800,000 in the financial and insurance sector are at risk of being substituted.
Past the technical modelling in the annex of productivity forecasts, it is not clear if there has been any anticipation of what could happen if more than two million jobs are automated.
In the OBR’s forecast for the budget, it estimates that unemployment will fall in the coming years to 4.1% from 5% – which means it expects all these substituted workers to find new jobs.
And just one sector – financial services – claims to represent 9% of the UK’s economic output (209bn) and 8.5% of the total tax revenue (£79bn).
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The UK government is betting big on providing AI infrastructure like data centres for economic growth, but its plan on potential workplace upheaval is less clear.
The Treasury has commissioned the Financial Services Skills Commission to study how AI could disrupt the financial services sector – but this is not due to report until the middle of 2027.
Other attempts to model the impact of AI on labour trends have leant into the idea that a gradual shift in the market will allow jobs that become redundant to replaced with newer opportunities.
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The Tony Blair Institute – a major proponent of AI – claims between one and three million jobs could to be lost to AI at a rate of 60,000 to 275,000 per year.
However, this is not sector specific, and their research adds: “AI is also likely to create new demand for labour by boosting economic growth and speeding the development of new products and services that create entirely new jobs.
“Over history, technology’s impact on labour demand has been a tale of the push and pull between these two forces of labour substitution and demand creation, and over the long run they have tended to balance out.”
Another way the erosion of jobs could take place is by recruitment freezes, with reports that big consultancy firms are already taking on fewer entry level workers due to AI.
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The Treasury has been approached for comment.
The OBR has been approached for comment.
