Bank of England governor Andrew Bailey has called for international cooperation to tackle growing AI threats, warning that the United States and the Trump administration would not be able to achieve their ambitions alone. Speaking at the annual Mansion House dinner in London, Bailey emphasized that no country can seal itself off from the cross-border nature of modern systems.
Bailey urges stronger coordinated testing
Bailey’s comments come weeks after US President Donald Trump temporarily banned foreigners from using Anthropic’s powerful Claude Mythos model. In an interview with the Guardian before his speech, Bailey said governments must join forces to prevent bad actors from gaining access to powerful digital tools. “We’ve got to get better international understandings of how we deal with the introduction of frontier AI,” he stated, arguing for stronger coordinated testing to ensure AI models are safe for wider circulation.
The Trump administration has already frustrated allies seeking a joint approach. The temporary ban on Anthropic’s models, including Claude Mythos, which experts warn poses potential threats to cyber defences, was lifted after just weeks. However, Bailey stressed that the US should recognize its limitations. “The US can’t achieve what it sensibly wants to achieve, in terms of strengthening defences, on its own because it is a highly interconnected system,” he said. In his speech to City bosses, he elaborated: “No country can seal itself off from the cross-border nature of systems that are prevalent today.”
Reeves defends economic record
Bailey’s call for action on AI coincided with a defiant Mansion House speech from Chancellor Rachel Reeves, who is preparing to exit the Treasury. In what is likely to be one of her last set-piece appearances, Reeves defended her record and warned her successor not to squander the “platform of stability” she had created. “The record of the last two years makes clear that governments can achieve that [radical] change only when they combine radicalism with credibility,” she said. “I had to earn that credibility in opposition, and I have proven it in government in every action that I have taken since I became chancellor. That hard-won credibility must be sustained and the foundations maintained if this work … is to continue.”
Andy Burnham is set to be confirmed as Labour leader on Friday and expected to take over as prime minister next week, with a new chancellor widely anticipated. Reeves cited statistics to prove her choices: “Last year, borrowing fell from 5.2% to 4.2% of GDP – its lowest level in six years. Investment is up, productivity is up, and wages are up too. Waiting lists are falling faster than at any time in the last 17 years and half a million children will be lifted out of poverty during the course of this parliament.” She added, “If I had said two years ago that this is where we would be today, people would have doubted it, but we have proven the doubters wrong.”
Economic resilience tested by global shocks
As the conflict in the Middle East flared up after the collapse of the US-Iran memorandum of understanding, Reeves warned that the UK economy would continue to face shocks. “The resumption of hostilities in the Middle East in the last few days has shown that our economic resilience will continue to be tested, and the market response to those changes shows that there is still work to do to insure our economy and our country against a volatile global landscape,” she said. The interest rate on 10-year UK government debt hit its highest level since May on Tuesday, above 5%, before falling slightly after Trump appeared to drop the threat of imposing a 20% levy on ships transiting the Strait of Hormuz.
A new chancellor would need to give 10 weeks’ notice to the independent Office for Budget Responsibility for a new forecast before a planned autumn budget. Sustained higher gilt yields would increase the government’s borrowing costs, eating into the £23.6bn of “headroom” Reeves set aside against fiscal rules at the last forecast in March. Whoever is in charge at the Treasury must also find an additional £4.7bn over the next four years to fund the defence investment plan. Burnham is believed to be keen to announce a cost of living package, as households face higher energy bills this winter due to the war’s impact.
Hassabis calls for US-led global AI watchdog
Bailey’s international cooperation comments came as Demis Hassabis, the British Nobel laureate and entrepreneur behind Google DeepMind, called for a US-led global AI watchdog to help test advanced models and halt their development if they pose too many risks. In an essay posted on X on Tuesday, Hassabis suggested that an AI model with cognitive capabilities equal to the human brain is “probably only a few short years away.”
