Bank of England Governor on AI and the next big tech breakthrough to hit the UK
The UK economy stands to benefit from major technology breakthroughs – but it’s a waiting game, says Bank of England Governor Andrew Bailey.
Speaking in Scotland on Monday (6 October), Bailey said the evidence would suggest that many economies, the UK included, are in a period of waiting for the next General Purpose Technology (GPT) to come along and lift economic growth.
He noted that many other things determine actual economic growth, but in terms of the growth of potential and living standards, productivity matters a lot. And behind that sits investment.
“In history, examples of GPTs are things like the steam engine, electricity, and most recently, the Internet.
“Their significance is that these technologies lead to economy-wide growth, re-shaping industries and markets. They spread out into many sectors of the economy, and for some quite extended period of time they keep developing and improving productivity, and they create an environment in which one innovation leads to another.”
Waiting for the next big thing
Bailey noted that the benefits of such technological shifts can, however, take some time to come through. He added that technological impacts on the productivity growth rate are not permanent – they can have a permanent effect on the level of activity and what we do day-to-day, but innovations have a life cycle in terms of their contribution to growth rates.
And then, we have to wait for the next GPT to come along, he said.
“So, should we be optimistic today? Yes is my view. But only if we make the necessary investment, and that depends on a lot of commitment. I am very much glass half full when it comes to investment opportunities. As I said earlier, I am hugely impressed when I visit businesses and witness innovation. The opportunities really are there.
“What then is the next GPT? Time for the crystal ball. I don’t think it is too hard to imagine that it will come in the area of AI, whether that is applied via robotics, quantum computing biotech/medical technology, or a number of other fields all of which are related. Many other things will contribute no doubt, so there is nothing exclusive about this list.”
Building a framework
If we are on the cusp of seeing another advance in GPT, we need the conditions to support an environment where investment occurs across the economy, said Bailey.
“From the official side, we need to provide a policy framework which sustains growth and innovation. I recognise that this sounds rather like motherhood and apple pie, but there is substance to it. For instance, we must take a pragmatic and open-minded approach to the potential and risks of AI.
“We must understand what it can and cannot deliver, and where it can create broader issues that will need to be tackled. But I would say to the alarmists that it is all of our responsibility to solve such issues rather than just broadcast them.”
