Workers face risk from AI market bets, Bank chief warns
Andrew Bailey says leveraged AI investments and dependence on major tech firms could magnify a market shock.
Workers with pensions, savings and bank accounts could be exposed to an AI-driven market shock built by investors and technology firms they do not control, the Bank of England Governor has warned.
Andrew Bailey, writing as chair of the Financial Stability Board ahead of G20 meetings, said stretched asset prices, rising borrowing and links between AI firms and major cloud companies could turn a future correction into a disorderly one.
He did not say that AI will cause a global downturn. His warning was that the financial system has made itself more vulnerable if investors reassess what AI companies can actually earn.
A crowded bet
That vulnerability rests on more than enthusiasm for new technology. Bailey pointed to leverage in equity markets, including leveraged exchange-traded funds and momentum-based strategies, some used by retail investors.
He also warned that cross-investment between AI companies and hyperscalers, the giant cloud providers supplying the computing power, could amplify a fall. “The issue is not simply that investors are borrowing more,” Bailey wrote.
The result is a familiar division of risk. Technology firms, hyperscalers and leveraged investors benefit while valuations and credit rise; workers can carry the consequences through pension funds, savings and jobs if wider markets fall.
How the exposure grew
The Bank has been tracking the problem for more than a year. In December 2025, it said AI companies made up 44% of the S&P 500’s market value and 67% of its returns so far that year, while AI-related debt finance was expanding.
By July, the Bank’s Financial Policy Committee said AI investment was being financed not only through public markets but private credit, leveraged finance and structured finance. That spreads the exposure beyond the technology sector.
For people with index-linked workplace pensions or investments, a broader correction could reduce holdings tied to those concentrated global markets. That is an inference from the Bank’s warning, rather than a forecast of losses for any particular saver.
The faster threat
Bailey said the more immediate danger may be cyber attacks. Frontier AI can make attacks cheaper, quicker and easier to scale, potentially disrupting financial services and damaging confidence across the system.
The Bank had already warned that firms using the same models, datasets or technology providers could share a single point of failure. A successful attack could therefore hit several firms at once.
Its latest systemic-risk survey found 32% of participating financial firms named AI among their five biggest threats to UK financial stability, up 11 percentage points on the previous survey.
Regulators promise action
There is a case for AI bringing productivity gains, better cyber defences and long-term growth. The Bank says the scale and timing of those gains, and whether firms can turn AI spending into profits, remain unknown.
It also says AI-company debt was still relatively modest at the start of 2026, limiting the immediate danger. But the government has acknowledged that major overseas AI-model and cloud providers are becoming systemically important to British finance while sitting outside direct regulatory oversight.
The firms selling the boom may be global. The risk, if the bet fails, reaches the pension pot and bank card at home.
