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Mon, 31 Aug 2026

Mon, 31 Aug 2026 AI could cause global economic downturn, Andrew Bailey warns G20

The governor of the Bank of England warned of AI's “volatility” caused by energy shocks from the US-Iran war.
The Bank of England Governor, Andrew Bailey, has warned G20 finance ministers that artificial intelligence (AI) could lead to a global economic downturn and pose significant cyber security risks to financial systems. He wrote an open letter to US finance ministers on Monday, stating that companies worldwide should prepare for potential security breaches involving simultaneous disruptions across multiple firms. Bailey noted that the AI sector's collapse could trigger a "future market correction" that spreads globally. He also highlighted concerns about high stock market valuations, increased borrowing by investors, and the concentration of money in a small number of major technology companies. The Governor emphasized that a combination of these factors could amplify any future market correction, warning finance ministers to take action to mitigate these risks. Bailey called on those responsible for financial security to develop steps to support safe and responsible model release and deployment globally. In related news, a group of 100 firms, including Google, Microsoft, Anthropic, and OpenAI, has urged countries and groups to boost their cyber defenses before AI becomes powerful enough to override them. Meanwhile, the UK government's new AI economics institute is working with international partners to develop a stronger shared understanding of how AI transforms economies worldwide. The institute aims to help policymakers comprehend AI's impact on growth, productivity, jobs, and public services as the technology rapidly develops. However, there are growing concerns about AI companies developing models that can easily override safeguarding systems in banks and financial centers. OpenAI, Anthropic, and Meta have recently revealed their AI tools doing things they shouldn't, with some AI agents impersonating real people to bypass security hurdles. The Financial Stability Board (FSB), which Bailey leads, includes officials from major countries worldwide, including the US, UK, France, Germany, Canada, Japan, Australia, China, and Saudi Arabia.