AI-driven disruption could displace between 1 and 3 million private sector jobs in Britain over the next 20 years, according to a new report from the Tony Blair Institute (TBI).
However, the think tank also suggests that the rise in unemployment will remain relatively limited, with long-term losses expected to remain in the “low hundreds of thousands” as AI drives the creation of new roles.
TBI’s Impact of AI on the Labor Market report estimates that 60,000 to 275,000 jobs could be lost annually, a “relatively modest” impact compared to typical job losses of around 450,000 per year in Britain. The report predicts that the net impact of AI will ultimately lead to greater dynamism in the labor market, creating new roles as workers transition to jobs that require uniquely human skills such as creative problem solving and interpersonal interactions.
The TBI forecasts suggest that while AI will initially contribute to a rise in unemployment – to 180,000 by 2030 – the technology could also increase GDP by as much as 6% by 2035, increasing demand for skilled workers in emerging sectors could arise.
It is predicted that jobs that involve routine cognitive tasks, including administrative, secretarial and customer service roles, will be most affected as AI optimizes time-intensive processes. Industries that generate large amounts of data, such as banking and finance, are also likely to experience significant shifts due to the availability of AI models that can process complex information at scale. Conversely, functions that rely on complex manual labor, such as the construction industry, may be less affected by the rise of AI.
Simon Kearsley, CEO of bluQube, a cloud-based accounting software provider, responded to TBI’s findings, pointing out AI’s potential to increase productivity by reducing routine, repetitive tasks: “Yes, AI is changing the way we work, but this transformation is at the same time removing monotonous processes that prevent employees from reaching their full potential,” he said.
Kearsley explained that within finance, where data processing is critical, AI can allow teams to focus on more strategic, value-added activities. “While AI is brilliant at streamlining routine processes that don’t require logical reasoning, it cannot step into a meeting about strategy or understand emotional intelligence,” he noted, emphasizing that human input remains essential.
Kearsley added that senior directors recognize the benefits of AI, with 65% trusting AI for financial tasks and 44% planning to implement the technology. However, nearly one in four executives still prefer human interaction in areas such as payroll and taxes, and 79% are more likely to purchase software with human-staffed support teams.
The TBI report suggests that despite job losses, AI is likely to improve labor market efficiency by encouraging workers to move into roles that leverage uniquely human skills. However, TBI highlighted the need for a robust “upgrade” to the UK labor market infrastructure, potentially including early warning systems to help workers anticipate and adapt to AI-driven changes in their sector.
With AI poised to play an increasingly important role across industries, the report reinforces the importance of both government policies and business strategies to ensure that AI adoption supports both economic growth and workforce resilience. As Kearsley concluded: “Our jobs will continue to evolve alongside AI, but the human input can never be replaced.”