Few countries in the world generate as much of their wealth from professional services as Britain.

The UK boasts an army of well-paid bankers, lawyers and accountants. However, this long-running strength now risks becoming the country’s Achilles’ heel as artificial intelligence upends the jobs market.

“There is a big change coming,” says Irina Pafomova, a City banker turned tech expert who now runs Zestic, an AI consultancy.

“I have been a professional in finance and investment banking and know the content of those jobs. Professional services are very vulnerable.”

Before leaving the City, Pafomova cut her teeth at the likes of Royal Bank of Scotland and ABN Amro, analysing balance sheets and identifying potential merger and acquisition targets.

Now she is helping financial institutions use AI to do more with less, fuelling fears that chatbots will increasingly replace the white-collar roles that dominate the City.

“In finance, legal and accounting, I think there’ll be a big net loss going forward,” Pafomova says.

The consequences of this shift are clear for Britain’s services sector, which accounted for 81pc of the UK’s economic output last year.

Among large, rich countries, only the US generated more of its output from services, the latest internationally comparable figures suggest.

“It does mean we’re likely to be much more impacted than other countries that don’t specialise in this kind of thing,” says Gregory Thwaites, a research director at the Resolution Foundation.

“A country that specialises in tourism, let’s say, or mining is going to be much less affected.”

Britain will not be as exposed to AI-driven job losses as countries such as India and the Philippines, which rely heavily on outsourced work from the West for call centres and IT support – but it is far from clear whether the UK economy is out of the woods, says Thwaites.

“It could go either way,” he says. “The effect is probably going to be large in one direction or another. It’s a huge source of potential downside and upside.”

Some 83pc of British workers work in services, the highest proportion of any large rich country – including the US, at 79pc.

That figure is 78pc in France, 73pc in Germany and 70pc in Italy.

Analysis by Morgan Stanley already suggests that the UK has suffered the greatest number of net job losses from AI so far, with productivity gains far from secure.

The dawn of AI has emerged just as employers scale back hiring in the wake of Rachel Reeves’s National Insurance tax raid and successive increases in the minimum wage.

Research from Goldman Sachs suggests that in the face of rising costs, employers are hiring less and investing more in assets.

Challenges facing employers have been further compounded by Sir Keir Starmer delivering the “biggest overhaul of workers’ rights in a generation”.

Experts fear this new layer of red tape will drive up the cost of hiring and increase the number of humans being replaced by robots.

“If you make the cost of hiring someone higher and you put all these regulations on them, then naturally you’re going to kind of tip the balance towards people wanting to explore automation more,” says Eamonn Ives, the research director at The Entrepreneurs Network.

The prospect of automation is most acute in the services sector, where white-collar administrative roles are more easily replaced by AI. For example, consultants at firms such as PwC have already cut hundreds of graduate positions.

Figures from the Office for National Statistics showed that finance and insurance alongside information and communication were the sectors that experienced the sharpest jobs downturn in the year to September 2025.

This contributed to the unemployment rate rising to a five-year high of 5.2pc – although many fear that AI will only push this higher.

Jobs disruption is also coming for the legal sector, insiders warn.

“We might see a much thinner profession in the future,” says Nick Hurley, at City law firm Charles Russell Speechlys. “I think that’s almost inevitable.

“AI has the capacity to reduce cost and definitely take jobs in the more commoditised, straightforward areas of law, which is slightly worrying.

“If you’re buying a house, for example, it’s a fairly routine process. It doesn’t really matter if you’re buying a £4m house or one for £200,000. AI will be very good at learning how that process works and dealing with it.

“It will help drive costs down. It will also displace jobs.”

However, when it comes to big legal battles where court strategy is key, he believes humans will still be needed – at least for now.

In his experience, AI is currently creating rather than destroying jobs, with new hires brought in to implement the technology.

However, it can already do one of the key tasks that trainee solicitors do, and much faster: reviewing dense legal documents often spanning a hundred pages or more and providing an accessible summary in layman’s terms.

“It will generate a really good document in 10 minutes or so,” says Hurley. “It’ll be very, very quick to produce an excellent quality product. If you had a trainee doing that job, it would take them a couple of days.”

Hurley claims his firm is not currently planning to reduce entry-level hiring, although he believes this could change in as little as two years.

In consulting, AI is already overhauling workflows rapidly, says Jonathan House, the head of consulting at PwC UK.

“AI is already having an impact on our clients and professional services firms at an unprecedented speed,” he says.

“Clients are using AI not just to drive efficiency but to fundamentally rethink how their organisations operate.

“Within consulting, we’re applying it to areas like advanced data analysis and scenario modelling, allowing us to deliver faster, more evidence-based and more forward-looking advice.

“There’s no question that jobs will change. Routine tasks are being automated and the premium on judgement, creativity and insight is rising.”

He insists, however, that human consultants will still be needed: “The human element – trust, judgement, problem-solving – will matter more, not less. AI will amplify expertise, not replace it.”

Meanwhile, Thwaites says the first consequence of AI will be to drive down prices.

“The supply of these business services is massively going to go up and the price is going to fall but the people who use that technology and harness it are going to become much more productive,” he says.

It’s therefore difficult to predict whether AI will trigger a productivity boom to reverse Britain’s dire economic track record or create an unemployment crisis with millions of workers out of work.

Britain’s highly educated workforce and growing AI start-up sector suggest there is potential for significant benefits, Thwaites says.

However, much will depend on political leaders managing the transition and investing in reskilling to avoid mass unemployment.

“Do I think it could go horribly wrong for the UK? Absolutely. But it could also go really well for us if we do it right,” Thwaites says.

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