What an AI future might hold for the labour market and the economy

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Layoffs look like the theme of this shares earnings season. But what is this doing to the labour market and is artificial intelligence (AI) to blame?

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Published on 8 February 2024

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

We’re nearing the end of earnings season and a key theme is emerging – layoffs. There’s been a big number of job cuts across a range of sectors in the US and Europe including tech, media, finance, and retail.

Citi announced it will cut 20,000 jobs this year, Amazon is planning to cut hundreds in its Amazon Prime Video unit, and even Microsoft is cutting 1,900 jobs at its Activision business.

In Europe, SAP, the German software company, is planning to trim 8,000 jobs. And back in the UK, Sky is planning to cut 1,000 jobs, Tata steel is going to close its Port Talbot steel plant and Lloyds Bank is closing more branches, cutting 1,600 jobs.

These job cuts are coming at the same time as labour markets are staying historically tight. The US created over 350,000 jobs in January and the UK unemployment rate is only