Bank of England warns an AI crash could plunge UK into recession

The Bank of England warned that a crash in artificial intelligence stocks could plunge the UK into recession, citing a potential 2.2% fall in GDP. Governor Andrew Bailey highlighted risks from overvalued AI stocks, slower-than-expected adoption, and uncertainty over long-term winners.

The U.K. is at risk of recession if the artificial intelligence bubble pops, the Bank of England warned today, as investors increasingly park their cash into tech stocks. A price correction in AI stocks, driven by a change in productivity and profitability among tech-led companies, could cause a 2.2 percent fall in U.K. GDP, the Bank warned in its financial stability report today. “The risk of a sharp correction in equity markets remains high,” said Bank of England Governor Andrew Bailey, warning of a "triple whammy" of AI-related risks to the economy: outsized bets on AI stocks, slower adoption of the technology than predicted and questions over which firms will be winners in the sector over the long run.