Bailey Says AI And Robotics Are Critical To UK Growth

Artificial intelligence and robotics could become vital engines of UK economic growth, according to Bank of England governor Andrew Bailey, in comments carrying significant implications for Britain's labour-intensive fresh produce industry.

Speaking to Bloomberg TV at the US Federal Reserve's annual Jackson Hole symposium in Wyoming, Bailey said Britain needed both faster economic expansion and stronger productivity.

He described the UK's growth outlook as different from that of the United States and said "AI and robotics are a critical source" of the improvement Britain requires.

For fresh produce businesses, his remarks touch on a transformation already under way in fields and packhouses.

Horticulture remains one of the UK's most labour-intensive industries, with many crops still harvested and packed by hand. Robotics, intelligent machinery, computer vision and automated packing systems are being developed to improve productivity while reducing the sector's dependence on seasonal labour.

The Government has underlined the importance of that work by opening a funding competition offering businesses a share of up to £20 million for automation and robotics projects across agriculture, horticulture and forestry.

The programme is intended to support innovations addressing productivity, labour availability, food quality, traceability, waste, crop health and sustainability. It specifically includes imaging and sensing technology, intelligent automated machinery and post-harvest packing systems.

Bailey was not speaking specifically about horticulture. Nevertheless, his argument that technology will be essential to improving national productivity closely reflects the pressures confronting growers and packers.

Inflation Pressures Remain Contained For Now

Bailey also offered a cautiously reassuring assessment of inflation, saying the broader effects of the latest energy shock remained "quite subdued".

Second-round effects occur when an initial rise in costs spreads through the economy in the form of higher wage demands and more widespread price increases.

The governor said the Bank was monitoring whether energy-driven inflation would become embedded and how quickly inflation could return to its 2% target. He pointed to a softening labour market as one reason the pressure had so far remained limited.

However, Bailey stressed that the position could change, describing it as an "evolving situation".

That warning matters to fresh produce businesses operating with narrow margins and considerable exposure to energy costs.

Protected crops including tomatoes, cucumbers and salads require substantial energy inputs, while refrigeration, cold storage, packing and temperature-controlled distribution add costs throughout the supply chain. Any prolonged increase in gas, electricity or fuel prices can therefore be felt well beyond the farm gate.

UK CPI inflation rose from 2.6% in June to 2.9% in July, its first increase since March. The largest upward contribution came from housing and household services, particularly gas and electricity.

Gas prices rose by 14.7% during July, while electricity prices increased by 3.6%. The Office for National Statistics said the energy price cap had risen partly because wholesale prices were affected by the conflict in the Middle East.

The Bank of England has held Bank Rate at 3.75% since December 2025. Its next interest-rate decision is due on 17 September.

US Rate Warning Adds Currency Uncertainty

Bailey's comments came as Federal Reserve chairman Kevin Warsh warned that US inflation remained too high.

Warsh said recent information had not yet provided sufficient reassurance about underlying inflation and suggested further action could be required if price pressures failed to move clearly towards the Fed's objective.

The possibility of different interest-rate paths in Britain and the United States adds another layer of uncertainty for fresh produce companies with costs denominated in dollars.

Changes in the relative strength of sterling and the dollar can affect the price of imported produce, fuel, fertilisers, machinery and other inputs, although exchange rates are influenced by many factors beyond interest rates alone.

For Britain's fresh produce sector, Bailey's two messages are closely connected. Businesses are being asked to invest in the technology needed to lift productivity while continuing to manage volatile energy costs, inflation and interest rates.

AI and robotics may offer part of the answer, but turning promising technology into commercially viable systems will require sustained investment, successful trials and equipment capable of working reliably in the demanding conditions of farms and packhouses.

This article is based on comments Andrew Bailey made in a Bloomberg TV interview at the Federal Reserve's Jackson Hole symposium, as reported by Anna Wise for PA Media and published by the Evening Standard. Direct quotations from Andrew Bailey and Kevin Warsh are as reported there; the fresh produce sector analysis is Freshtalk Daily's own.