Millions of UK Jobs in Finance and Professional Services Face AI Substitution
The UK's economic watchdog has delivered a stark warning, revealing that millions of jobs in the country's most critical sectors are at risk of being replaced by artificial intelligence. An analysis by the Office for Budget Responsibility (OBR), buried within budget documents, suggests that the financial, insurance, and professional services industries are particularly vulnerable to automation.
The OBR's modelling indicates that a staggering 2.1 million jobs could be "substituted" by AI within the next decade. This breaks down to 1.3 million roles in professional services and a further 800,000 in the financial and insurance sector. These industries are not only some of the UK's largest employers but are also among the most lucrative, contributing significantly to tax revenues and being singled out in the government's industrial strategy as key areas for growth.
Substituted vs Complemented: The AI Impact on the Workforce
The OBR's analysis, which notably utilised large language model AIs in its preparation, categorised the potential impact of the technology into two distinct groups. Roles deemed to be at risk of substitution are those where tasks "could be fully automated without the need for human involvement." Conversely, jobs that could be complemented are those where "AI will help people carry out these tasks more efficiently rather than replacing them."
Despite the concerning forecast for job losses, the OBR does not present a wholly bleak picture. The watchdog suggests that AI will boost UK productivity, estimating that the technology will make the country 0.2% more productive by the end of the decade. This potential for increased efficiency is a key part of the government's bet on AI infrastructure, such as data centres, to fuel economic growth.
Government Outlook and Industry Response
Amid the warnings of widespread automation, the government's position appears optimistic. The OBR's own budget forecast estimates that unemployment will fall to 4.1% from 5% in the coming years, implying an expectation that all workers displaced by AI will find new employment. However, the analysis itself notes a lack of clear anticipation for what happens if more than two million jobs are automated.
The scale of the potential disruption is immense. The financial services sector alone represents 9% of the UK's economic output (£209bn) and contributes 8.5% of total tax revenue (£79bn). In response, the Treasury has commissioned the Financial Services Skills Commission to study how AI could disrupt the sector, though its report is not due until mid-2027.
Other analyses, such as one from the Tony Blair Institute, align with the OBR's findings, suggesting that between one and three million jobs could be lost to AI across the entire economy. Their research, however, also points to history, where technological advances have eventually balanced labour substitution with the creation of new demand and entirely new job categories. For now, reports indicate that some major consultancy firms are already implementing recruitment freezes for entry-level positions, hinting that the erosion of roles may have already begun.
