AI-driven disruption could displace between 1 and 3 million private sector jobs in the UK over the next two decades, according to a new report from the Tony Blair Institute (TBI).

However, the thinktank also suggests that the rise in unemployment will be relatively contained, with long-term losses predicted to remain in the “low hundreds of thousands” as AI spurs the creation of new roles.

TBI’s Impact of AI on the Labour Market report estimates that 60,000 to 275,000 jobs could be displaced annually, a “relatively modest” impact when compared to typical job losses of around 450,000 per year in the UK. AI’s net impact, the report predicts, will ultimately drive greater dynamism in the labour 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—up to 180,000 by 2030—the technology could also boost GDP by as much as 6% by 2035, creating demand for skilled workers in emerging sectors.

Jobs involving routine cognitive tasks, including administrative, secretarial, and customer service roles, are predicted to be the most impacted as AI optimises time-intensive processes. Sectors generating vast amounts of data, such as banking and finance, are also likely to see significant displacement due to the availability of AI models capable of handling complex information at scale. Conversely, roles that rely on complex manual labour, such as construction, may be less affected by the rise of AI.

Simon Kearsley, CEO of bluQube, a cloud-based accountancy software provider, responded to TBI’s findings, pointing to AI’s potential to enhance productivity by reducing routine, repetitive tasks: “Yes, AI is changing the ways we work, but this transformation is simultaneously removing monotonous processes that hold employees back 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-adding activities. “While AI is brilliant for streamlining routine processes that don’t require logical reasoning, it can’t step into a meeting about strategy or understand emotional intelligence,” he noted, highlighting that human input remains essential.

Kearsley added that senior directors recognise AI’s benefits, with 65% trusting AI for finance tasks and 44% planning to implement the technology. However, nearly one in four directors still prefer human interaction in areas like payroll and tax, and 79% are more inclined to purchase software with human-staffed support teams.

The TBI report suggests that, despite job displacement, AI is likely to improve labour market efficiency by prompting workers to transition into roles that leverage uniquely human skills. However, TBI emphasised the need for a robust “upgrade” in the UK’s labour market infrastructure, potentially including early warning systems to help workers anticipate and adapt to AI-driven changes in their industries.

With AI poised to play an ever-growing role across sectors, the report reinforces the importance of both government policy and business strategies in ensuring that the adoption of AI supports both economic growth and workforce resilience. As Kearsley concluded, “Our jobs will continue to evolve alongside AI, but human input can never be displaced.”