Egan-Jones warns AI will disrupt global economic structures

Credit rating agency Egan-Jones has issued a stark warning that artificial intelligence is poised to fundamentally dismantle the current economic model. In a commentary titled “It’s Over,” the firm asserts that the complete disruption of the economy is now all but certain. The report highlights that businesses selling expertise by the hour, including those relying on senior talent, are the most vulnerable to immediate impact. The agency predicts compressed margins in professional services, lower returns for venture capital, and short-term pressure on home prices as screen-based roles face significant disruption.

The firm argues that recent advancements in AI have crossed a critical threshold in both output quality and speed, facilitating widespread adoption. This technological shift is expected to create an entirely new business paradigm where organisations with minimal headcount achieve superior success, with some potentially operating without any human employees. Egan-Jones suggests that startups leveraging these tools can expand with significantly less investment, thereby reducing the traditional importance of capital. This dynamic is projected to cause a quiet deflation in the value of money, leading to a loss of leverage for venture firms and a subsequent compression of their returns.

The impact on the professional services sector is expected to be particularly severe. As AI chatbots become capable of providing advice, the demand for traditional consulting firms may decline. Some consultancies have already begun reducing their workforce in response to these technological changes. However, it is important to note that Egan-Jones is a smaller credit agency, meaning its predictions do not carry the same institutional weight as those from the major rating houses. Many economists caution that the current picture of AI-driven job losses remains unclear and may be overstated. They argue that employers often attribute headcount reductions motivated by purely financial reasons to artificial intelligence. Nevertheless, the serious consideration of economic disruption by financial analysts underscores the growing concern over the future of work.