“I was doing Dry January for the trend and health benefits, but now that I have been laid off, I think this is more of a financial necessity,” joked London-based Callum Hill, recently cut by one of the UK’s fintech majors.
The line lands lightly, but it captures a deeper shift rippling through labour markets: artificial intelligence is no longer a future threat debated in boardrooms.
It is reshaping corporate workforces in real time, accelerating job cuts across technology, finance, media and manufacturing, even as executives tout productivity gains and investors reward efficiency.
From London to Seattle, companies are increasingly explicit about the role AI is playing in shrinking payrolls, offering an early glimpse of how the labour market may adjust to one of the fastest technological shifts in modern history.
The scale and speed of change are beginning to show up in data.
New research from Morgan Stanley suggests Britain is already experiencing sharper job losses from AI adoption than other major economies, a development the bank describes as an “early warning sign” for global labour markets.
At the same time, high-profile layoffs at Amazon, Meta, UPS, Citigroup, and other companies underscore how AI is becoming both a strategic priority and a convenient explanation for workforce reductions.
Britain as an early stress test
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Morgan Stanley’s research surveyed companies that have used AI for at least a year across five sectors exposed to automation: consumer staples and retail, real estate, transport, healthcare equipment and automobiles.
British companies reported an average productivity boost of 11.5% from AI, broadly in line with peers in the US, Germany, Japan and Australia.
What distinguishes the UK is the employment outcome.
British firms reported net job losses of 8% over the past year, the highest rate among the countries surveyed and roughly double the international average.
US firms, by contrast, reported similar productivity gains while creating more jobs than they cut.
The data suggest that while AI is prompting companies globally to cut or freeze around a quarter of roles, British employers are significantly less likely to step up hiring elsewhere.
The result is a sharper net decline in employment, particularly in early-career roles requiring two to five years of experience.
Rachel Fletcher, one of the report’s authors, said the findings had emerged repeatedly in recent investor discussions.
She described them as an early signal of how AI could disrupt labour markets more broadly as adoption spreads.
Costs, policy and the UK squeeze
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AI’s impact in Britain is unfolding against a difficult economic backdrop.
Employers are contending with higher taxes, rising employer national insurance contributions and increases in the minimum wage imposed by Labour.
Official figures show companies are cutting jobs at the fastest rate in six years, while unemployment is near a five-year high.
Vacancies have fallen by more than a third since 2022, equivalent to around 500,000 roles, according to the Office for National Statistics.
About a fifth of that decline has come from sectors likely to be affected by AI, including IT, professional and administrative services, and science.
The interaction between automation and higher costs may help explain why productivity gains are not translating into new hiring.
Rather than redeploying workers into new roles, firms appear to be banking efficiency gains to offset rising expenses, amplifying job losses in the short term.
Corporate America leans into efficiency
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The pattern is not confined to Britain. Across the US, companies are increasingly linking workforce reductions to AI-driven efficiency.
Amazon has announced plans to cut 16,000 corporate jobs, with the latest round affecting roles across Amazon Web Services, retail, Prime Video and human resources.
An internal email drafted by senior vice president Colleen Aubrey, and briefly circulated by mistake, described the cuts as part of a long-running effort to reduce layers, increase ownership and remove bureaucracy.
Amazon is far from alone.
United Parcel Service is moving ahead with a sweeping restructuring that could eliminate as many as 30,000 jobs this year, highlighting the mounting costs of its split from Amazon as competition intensifies in the US delivery market.
Microsoft cut around 15,000 roles during 2025, after chief executive Satya Nadella said that AI was writing 20% to 30% of the company’s code.
Salesforce’s Marc Benioff has said AI agents now handle roughly half of customer interactions, allowing the company to reduce its customer support workforce from about 9,000 to 5,000.
At IBM, chief executive Arvind Krishna confirmed that AI chatbots had replaced several hundred HR roles, even as overall employment increased in other areas.
Klarna’s Sebastian Siemiatkowski has been more blunt, saying the fintech cut around 40% of its workforce as AI took over tasks once performed by humans.
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The wave of AI-linked cuts is spreading beyond Silicon Valley.
Citigroup is eliminating about 1,000 jobs this week as part of a broader plan to cut 20,000 roles by the end of 2026.
The bank has cited efficiencies gained through technology alongside its strategic overhaul under chief executive Jane Fraser.
BlackRock, the world’s largest asset manager, is cutting about 250 jobs as it reshapes its business following its acquisition of private credit specialist HPS Investment Partners.
Meta Platforms is preparing to lay off around 10% of employees in its Reality Labs division, redirecting resources toward artificial intelligence as competition intensifies.
In Europe, chipmaking equipment giant ASML is cutting 1,700 jobs, mostly in R&D leadership, even as demand from AI-focused customers drives record orders.
Pinterest plans to trim less than 15% of its workforce as it reallocates resources toward AI-focused roles, though investor reaction has been cautious.
Morgan Stanley estimates that more than 200,000 European banking jobs could disappear by 2030 as lenders automate back-office, risk management and compliance functions.
The projected efficiency gains of up to 30% are enticing for executives, but the social consequences are becoming harder to ignore.
Workers grow anxious
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Surveys suggest anxiety among workers is rising faster than layoffs alone would imply.
A Randstad survey found more than a quarter of UK workers fear their jobs could disappear completely within the next five years due to AI, with concern highest among younger workers.
A Mercer Global Talent Trends report showed 40% of employees worldwide feared losing their jobs to AI, up from 28% in 2024.
In the US, consulting firm Challenger, Gray & Christmas attributed nearly 55,000 layoffs in 2025 to AI.
A Massachusetts Institute of Technology study found AI could already perform tasks covering 11.7% of the US labour market, potentially saving $1.2 trillion in wages across finance, healthcare and professional services.
At the same time, some economists caution against overstating AI’s immediate impact.
Yale University’s Budget Lab found little evidence of widespread AI-driven job losses in US labour market data between 2022 and 2025, suggesting that many companies may be using AI as a narrative cover for cuts driven by other factors.
Warnings from AI’s creators
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Few voices have been louder on the risks than Anthropic chief executive Dario Amodei.
He has warned that AI could destroy half of all white-collar jobs, triggering what he calls an “unusually painful” labour market shock.
In a lengthy essay, Amodei argued that AI’s cognitive breadth allows it to act as a general substitute for human labour across multiple industries simultaneously.
Unlike past technological revolutions, he wrote, AI’s speed and scope could overwhelm societies’ ability to adapt.
He called for government intervention, including progressive taxation of AI firms, to manage the transition.
Others in the industry disagree. Nvidia chief executive Jensen Huang has said AI will create high-paying jobs in construction, manufacturing and infrastructure, including building chip factories and data centres.
JPMorgan’s Jamie Dimon has argued governments should focus on retraining and local support to help workers transition.
Politics catches up
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The debate is increasingly political. In the UK, Prime Minister Sir Keir Starmer has made AI central to his vision of national renewal, betting that the technology can drive growth and competitiveness.
The Morgan Stanley findings complicate that narrative, suggesting the near-term adjustment may be harsher than anticipated.
London mayor Sadiq Khan has warned AI could destroy swathes of jobs in the capital, while policymakers across Europe and the US grapple with how to regulate AI without stifling innovation.
The risk is that labour markets adjust faster than social safety nets or retraining systems can respond.
A turning point for work
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What emerges from the data and corporate disclosures is not a single story of technological progress or destruction, but a complex transition marked by uneven outcomes.
AI is delivering real productivity gains, but those gains are not being shared evenly across workers, sectors or countries.
Britain’s experience suggests that cost pressures and policy choices can amplify AI’s disruptive effects, turning efficiency into job losses rather than redeployment.
In the US, stronger growth and more flexible labour markets appear to be cushioning the blow, at least for now.
For companies, AI offers a powerful lever to cut costs and boost margins.
For workers, it introduces uncertainty at a pace few have experienced before. And for governments, it poses a test of whether policy can keep up with technology that is reshaping work faster than institutions can adapt.
The question is no longer whether AI will change the labour market, but how painful that transition will be — and who will bear the cost.
