BoE's Bailey warns AI boom risks market correction — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Andrew Bailey, governor of the Bank of England, warned that the AI investment boom could trigger market shocks and said the central bank is watching the sector "very carefully," telling the BBC the UK must be "on top" of both AI's risks and benefits.
- Bailey cautioned that "not everybody always wins" and that current valuations price "everybody" as a winner, citing Netscape — once the leading internet-search firm — as a precedent for how quickly market leaders can fall.
- Asked directly if an AI bubble could burst, Bailey replied: "You could see some correction of asset prices at some point," and said the Bank is preparing "for the fact that there will be… some shocks come along to markets."
- Nvidia is the world's most valuable listed company at a $5.5tn (£4.14tn) market valuation driven largely by AI-profit expectations, while Alphabet, Meta, Microsoft and Amazon are collectively spending hundreds of billions of dollars on the technology.
- Anthropic and OpenAI are preparing to sell shares on US stock markets in moves widely expected to channel hundreds of billions more dollars into the AI sector.
- Bailey flagged cyber attacks as a major risk, calling AI "a very powerful, potentially very powerful, weapon" for uncovering long-standing software vulnerabilities "in the wrong hands."
- Bailey has personal experience of deepfakes — in June, fake images depicting him and Nigel Farage in a physical fight were promoted on X and proved difficult to trace back to their source.
- On the upside, Bailey said AI could "speed up the work that supports the Monetary Policy Committee" that sets UK interest rates, framing it as a policymaker tool rather than a decision-maker.
Why it matters: The Bank of England is formally classifying the AI investment surge as a source of potential systemic financial risk, with Bailey explicitly warning of asset-price corrections and likening current valuations to the Netscape era. With Nvidia at $5.5tn and hundreds of billions more flowing in via Anthropic and OpenAI share sales, the central bank is signaling it wants market resilience in place if expectations unravel — even as it pursues AI's productivity upside for setting UK interest rates.
Ask SkimNews
