KPMG claims generative AI could boost UK by £31 billion

The hype surrounding generative AI continues to grow. According to a new study from KPMG, the technology could raise UK productivity enough to realise a £31 billion economic boost.

As the universal disappointments of the metaverse fade from memory, the world has already moved on to its next speed-run of Tulip mania. Generative AI has quickly filled the void left by the metaverse, in terms of filling executives with a colossal sense of FOMO, due to its billed 'benefits', however amorphous or non-descript they might be – leading to a seemingly endless amount of investment flooding into the nascent market.

As it looks to ride this new wave of excitement, KPMG - which was also became an early adopter of NFTs and the metaverse as its clients were swept up in the hype surrounding those exciting new innovations – has announced a new expansion with Microsoft, to put AI at the forefront of its offering. Pointing to an “incremental growth opportunity”, a release from KPMG suggested its five-year, multi-billion commitment to Microsoft could yield benefits of $12 billion – as it works to “supercharge” its employee and customer experience, leveraging AI to “unleash their creativity, provide faster analysis and spend more time on strategic advice.”

Summarising the firm’s hopes for its latest flagship technology investment, Jon Holt, the CEO of KPMG in the UK, commented, “For us, this is just the beginning. AI is the biggest question facing businesses and society. It has the power to boost the UK’s productivity and generate an additional £31 billion of output every year. There are significant opportunities for our profession. We’re already using AI to spot trends, predict outcomes and quickly analyse huge volumes of data. Our alliance with Microsoft will enable us to go even further and jointly build products for our clients and give our people early access to new AI technology and tools.”

The firm expect the impact of AI to range far beyond its own operations, though. According to a new report from the firm, the UK’s battered economy could get a much-needed £31 billion boost from the widespread adoption of generative AI, with the technology boasting the potential to increase UK productivity by 1.2% each year.

Speaking on the firm’s estimations, KPMG UK Chief Economist Yael Selfin suggested generative AI could carry out “on average, around 2.5% of tasks across various occupations in the UK”. He added this could mean workers will have more time to focus on other activities – a long-standing argument in favour of automation.

Job reduction

Many doomsday scenarios have suggested this could lead to a massacre of jobs, with bosses laying off swathes of workers to replace them with cheaper AI. That at least seems a distant prospect, with KPMG’s study suggesting just 10% of occupations will face “significant impact” – which may or may not include massive reorientation of jobs – with over five% of their work affected. However, in the coming years, four-in-10 jobs should expect some kind of impact from generative AI, as companies try to enable their staff to do more with less.

Expanding on those points, Selfin explained that generative AI was not going to steal “many” jobs – but it could present several transition challenges. Changes in working practices of some jobs could cause “short-term skill mismatches” as people adjust to the new technology, and like any other transformation, firms will need to bear these in mind if they are to get the most from the new technology. That’s why KPMG, and so many other consultancies (including the likes of Bain & Company, Cognizant and Atos) are ramping up their AI lines – in preparation to support a glut of firms trying to find their way on their AI journeys.

Going into detail of which roles may be for the axe first, KPMG’s study noted that generative AI technology would primarily impact creative roles like authors, translators, graphic designers, along with IT support technicians and legal professionals, due to its text-based and visual nature. Fortunately, those unfulfilled workers whose roles are “significantly impacted” by generative AI will be able to seek new fulfilment in the retail, customer services, hospitality, construction, and manufacturing sectors – which KPMG expects will experience ‘minimal impact’ from the technology.

Workers who remain in their old roles in this not-at-all dystopian society will also have to adapt to major changes, according to the report. With generative AI supposedly making menial tasks quicker to get through, staff will instead be expected to use more time to commit to ‘value adding activities’ – accelerating work, and thus productivity.

Productivity

KPMG UK Head of Connected Technology Paul Henninger, added, “While there are concerns about the impact of generative AI on jobs, it will likely be used as an enabler of our strategies and processes. Roles will change to work with the technology”.

The suggestion that the productivity of the UK and global economy could improve under these conditions does suggest that much of the slowdown has been down to staff being bogged down in menial tasks. Some economists will dispute that, though, pointing instead to stagnant wages as a major driving force of poor productivity. Working alongside generative AI, it seems unlikely that staff will be able to count on a substantial raise out of the generosity of their boss’ heart, not least because they will be looking to compensate the expense of the new technology.

At the same time, working conditions have also seen a decline in recent years, with the term “burnout” – a syndrome conceptualised as resulting from chronic workplace stress that has not been successfully managed – have become household terms. As bosses demand more and more of their staff in terms of creativity and productivity, they conversely cause them to be far less productive, as burnout results in their capacity to work to significantly decline. Critics of AI have already warned that its simple advent will not reduce this issue – and depending on how it is used, may actively exacerbate it.

If AI does initially make workers more productive, it is possible that very quickly, firms decide they need fewer staff, and reduce headcounts to maximise profits. In the long term, this will add even more burden to the average workload of a firm’s individuals.

To that end, Danielle Li, author of a working paper from the National Bureau of Economic Research, a Boston-based non-profit organisation, recently told the BBC, “It's very easy for companies to keep raising the bar. You can use AI to ease burnout, or you can use it to make it much, much worse.”