AI hype, economic reality, and the future of work
Sundar Pichai, CEO of Google, recently warned that no company, including Alphabet, would be immune if an AI bubble bursts. This observation is particularly significant because it comes from someone deeply invested in AI. He is highlighting not only the extraordinary promise of AI, but also its potential risks, that business leaders, policymakers, and society must take seriously.
It is important to acknowledge the current tension: valuations are historically high, investor enthusiasm is intense, and the pace of AI infrastructure development is unprecedented. However, as with previous technological bubbles, this does not imply that the underlying technology is without value. AI has the potential to transform productivity, public services, innovation, and economic output.
Equally significant, the risk lies not in AI itself, but in misallocation of capital, reckless speculation, and neglect of long-term societal costs, such as energy consumption and governance challenges. A sudden market correction could undermine confidence in genuinely beneficial AI applications.
The solution, however, is not to cease AI investment, as such a pause is impossible in the context of the current global AI race, but rather to invest judiciously.
Governments should establish clear regulatory frameworks; businesses should differentiate value-driven AI from hype; and society must cultivate a realistic understanding of both the strengths and limitations of AI. AI is both a technological and economic force. The manner in which we respond today will determine whether AI develops into a sustainable engine for innovation or a speculative phenomenon that erodes trust and investment.
It is also clear that markets are dynamic systems, and the current situation reflects a misalignment between capital deployment and labour market readiness. While AI promises efficiency gains and higher output, the skills, human oversight, and organisational capacity necessary to deploy these technologies effectively remain insufficient. This imbalance, an oversupply of AI-driven tools relative to available human capacity, may produce inefficiencies or even diminish value.
The future of work is central to this discussion. AI will redefine roles and reshape economic contribution, yet the prevailing discourse on AI-driven productivity frequently overlooks the human element: whether employees possess the skills, discretion, and capacity to leverage AI optimally.
We need to be reminded that economic contribution is not solely a function of algorithms or automation; it depends on human agents being able to use AI safely, ethically, and strategically. If addressed correctly, AI adoption can generate sustainable growth, with productivity gains matched by skilled labour participation and balanced economic value.
A potential AI bubble, if it bursts, could recalibrate expectations and eliminate speculative excess. The greater risk, however, is imbalanced growth: artificially inflated productivity metrics in select sectors alongside widespread labour market lag in skills, remuneration, or opportunity.
To achieve genuine economic equilibrium, AI adoption must translate into wages, employment opportunities, and sustainable growth. Governments and businesses must act to maintain this balance; otherwise, oversupply will face insufficient demand. For policymakers, this entails designing policies that support AI adoption while investing in workforce reskilling, education, and equitable remuneration. For CEOs, it involves deploying AI in ways that enhance human productivity rather than merely replacing roles, which could have deeper effects on consumer affordability and market demand.
Ultimately, the goal is a balanced ecosystem: AI functioning as a tool for real economic contribution, where markets, labour, and capital interact sustainably, rather than producing a transient surge in productivity or market valuations.
Author
Dr S Asieh Tabaghdehi
Dr S Asieh Tabaghdehi
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Kir Nuthi
Kir Nuthi
Kir Nuthi is the Head of AI and Data at techUK.
She holds over seven years of Government Affairs and Tech Policy experience in the US and UK. Kir previously headed up the regulatory portfolio at a UK advocacy group for tech startups and held various public affairs in US tech policy. All involved policy research and campaigns on competition, artificial intelligence, access to data, and pro-innovation regulation.
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Usman Ikhlaq
Usman joined techUK in January 2024 as Programme Manager for Artificial Intelligence.
He leads techUK’s AI Adoption programme, supporting members of all sizes and sectors in adopting AI at scale. His work involves identifying barriers to adoption, exploring solutions, and helping to unlock AI’s transformative potential, particularly its benefits for people, the economy, society, and the planet. He is also committed to advancing the UK’s AI sector and ensuring the UK remains a global leader in AI by working closely with techUK members, the UK Government, regulators, and devolved and local authorities.
Since joining techUK, Usman has delivered a regular drumbeat of activity to engage members and advance techUK's AI programme. This has included two campaign weeks, the creation of the AI Adoption Hub (now the AI Hub), the AI Leader's Event Series, the Putting AI into Action webinar series and the Industrial AI sprint campaign.
Before joining techUK, Usman worked as a policy, regulatory and government/public affairs professional in the advertising sector. He has also worked in sales, marketing, and FinTech.
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Sue Daley OBE
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Prior to joining techUK in January 2015 Sue was responsible for Symantec's Government Relations in the UK and Ireland. She has spoken at events including the UK-China Internet Forum in Beijing, UN IGF and European RSA on issues ranging from data usage and privacy, cloud computing and online child safety. Before joining Symantec, Sue was senior policy advisor at the Confederation of British Industry (CBI). Sue has an BA degree on History and American Studies from Leeds University and a Masters Degree on International Relations and Diplomacy from the University of Birmingham. Sue is a keen sportswoman and in 2016 achieved a lifelong ambition to swim the English Channel.
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