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AI, FTSE 100, and By-Election In Focus

Word of the week Wednesday, eight million jobs at risk of being taken over by artificial intelligence, FTSE 100 rose 20bps through the session and closes at 12-month highs, and departure of Blackpool South MP sees another by-election in sight.

Word of the Week Wednesday

Cable: The exchange rate between GBP and USD. The term dates back to the mid-19th Century when exchange rates were sent from London to New York City via a cable across the Atlantic Ocean.

AI

The Institute for Public Policy Research have published a paper which suggests that eight million workers’ jobs are at risk of being lost to artificial intelligence, in the worst-case scenario. The paper indicated that the UK is at a critical juncture in the integration of AI and thus it is of the utmost importance that the government develops a comprehensive strategy ahead of a second AI wave. The IPPR’s paper also maintains that governments, employers and unions could work together to best optimise the future outcome for the UK labour market, minimising job losses while capturing economic growth.

Amongst the think tank’s key findings were that “11 per cent of tasks are exposed to existing generative AI, rising to 59 per cent if companies integrate AI more deeply”. It also found that the central scenario of a second wave of AI would see just under four and a half million jobs lost with economic output growing 6.3%.

The paper also highlighted the upside potential of AI integration, stating that considerable wage growth and expansion of UK output was also possible. Its of course worth considering how a large proportion of jobs in the modern UK economy could not have conceived at the turn of the 20th century (or even perhaps the turn of the 21st century). In fact, the IPPR highlighted that the best-case scenario would reflect “full augmentation” where “all jobs at risk are augmented to adapt to AI, instead of replaced”. This, it said, would not lead to any lay offs but instead increase GDP by 13%.

FTSE Closes at 12-month Highs

Yesterday, the FTSE 100 closed at 12-month highs as it rose 20bps through the session. This continues the blue chips rally which was assisted by the expectation that the Bank of England may be more dovish moving forward following the voting make up of their monetary policy meeting last Thursday.

The strongest performers yesterday were Kingfisher – which closed the session some 3.6% up – and Marks and Spencer whose stock rose 3.4%. Stocks of some mining-based companies however came under pressure as markets considered dampened demand expectations from China. For example, Rio Tinto’s stocks lost 2%, as Fresnillo and Anglo American each lost around 1%.

With a close of 7,930.96, the FTSE 100 trades below its closing record of 8,012.53 set on 16 February 2023 (and Intraday high of 8,047.06 set on the same day).

Attention now turns to the release of UK GDP figures tomorrow morning.

By-Election In Sight Following MP’s Resignation

Another by-election looks set to take place following the departure of Blackpool South MP, Scott Benton.

The former Conservative MP was serving a 35-day suspension from the House of Commons after an investigation into lobbying subsequently saw MPs favour his suspension. Though Benton had been suspended from the Conservative Party last April, he kept his seat as an independent during the subsequent months as the Commons’ investigation continued.

Last April, Benton was at the centre of an investigation by The Times which involved undercover reporters (pretending to be gambling executives) film the MP saying that he could lobby ministers. He was also recorded saying that he could put questions to parliament and publish confidential papers.

Since the suspension catalysed a recall vote – which would have forced the MP out of office if 10% of voters in his constituency supported doing so – Benton resigned before any such proceeding took place.

It now appears likely that the by-election will take place on 2 May. Given the marginal majority that the Conservatives secured for the seat during the last General Election (just 3,690), it will pose itself as a challenge for the government who have thus far lost 10 seats in by-elections since 2019 (against gaining one and maintaining three).

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