Andrew Bailey warns G20 on AI market and cyber risks

Bank of England governor Andrew Bailey warned G20 finance ministers that a sharp reversal in the AI sector could trigger a global market downturn and create serious cybersecurity risks for financial systems. In an open letter sent on Monday, he said firms should prepare for breaches involving simultaneous disruption across multiple companies.

Bailey said highly priced stock markets, increased investor borrowing and the concentration of money in a small group of major technology companies could amplify a future correction. He pointed in particular to cross-investment between AI companies and hyperscalers, arguing that leverage, valuations and market concentration are interacting in ways that could spread stress more widely.

The warning follows a call from a group of 100 firms, including Google, Microsoft, Anthropic and OpenAI, for countries and institutions to strengthen cyber defences before AI becomes powerful enough to override them. Bailey also raised concern about market volatility linked to energy supply shocks from the US-Iran war and urged financial security leaders to support safe and responsible model release globally.

The UK government said its AI economics institute is working with international partners to understand how AI is changing growth, productivity, jobs and public services. The government has also announced a £100m fund to support British AI start-ups as part of efforts to expand sovereign AI capacity.