Jobs-pocalypse or productivi-splosion? The AI data is in Top of the charts 20 February 2026 Ruth Curtice Morning all, Resolution Foundation is a great place to work – albeit not a guaranteed route to the OBR despite what you may have heard – and if you know of any bright young sparks who might be suited to the think-tank life, please do point them in the direction of our outreach session elucidating how to break into the sector. We’ve been knee-deep in data at RF towers this week, between worrying upticks in youth unemployment and welcome falls in inflation (scroll to Chart of the week for more on that) not to mention the promising upside surprise from tax receipts in the public sector finances data this morning. Keep reading for answers on AI, a documentary about potholes, and our take on making the OBR the best version of itself. Have a great weekend, Ruth Chief Executive Resolution Foundation Automation innovation. There’s no shortage of hyperbole around AI. Are we facing a jobs-pocalypse? A productivi-splosion? With his academic hat on, our Research Director Gregory Thwaites and his co-authors set out to measure how firms are already using AI, and what they expect it to deliver. Their paper uses surveys of nearly 6,000 senior executives across various countries and finds that AI adoption is already widespread. Around 70 per cent of firms use AI, especially larger, more productive and higher‑paying businesses. Most senior executives use AI, but typically for a couple of hours a week. So far, the economic impact has been limited. Over the past three years, more than 80 per cent of firms report no change in employment or productivity due to AI. Expectations for the future, however, are far larger. Firms anticipate that AI will boost productivity by around 1.4 per cent while slightly reducing employment – by about 0.7 per cent – over the next three years (mainly through fewer new hires). If all this upheaval is spooking you and you’re in need of a slightly scary pep talk about AI adoption, you could do worse than this. Levelled playing field. For those inclined towards pessimism about global inequality, new analysis from Brookings and the World Data Lab provides some useful nuance. The world is more equal than it was at the turn of the century (at least when measured by what people actually spend). Global consumption inequality has more than halved since 2000, fuelled mainly by years of meteoric growth in China that helped close the gap with advanced economies, with India and Southeast Asia hot on its heels. The global bottom half’s share of consumption has risen from 7 per cent to 12 per cent, and for the first time surpasses that of the top 1 per cent. On the less happy side, within-country inequality has remained broadly flat and progress on extreme poverty has stalled out entirely. It’s the potholes, stupid. With public appraisal of public services low and falling, the humble pothole has come to be highly redolent of widespread disappointment in the ability of the Powers That Be to make our daily lives better. Enter Potholesville – a disproportionately entertaining short YouTube documentary about the unfillable potholes on one particularly cratered stretch of road in Bedfordshire. In the words of the heroic pothole filler at the centre of the tale, it a story “about responsibility, and the way that bureaucracies will do almost anything rather than accept it”. Ouch. Baby doom. Fewer people are begetting babies. We know this. But do we know what it will mean for living standards? This new paper models the effect of consistently low fertility rates on living standards via the effects on dependency ratios, investment, debt and innovation, and finds that the result is negative but modest. Even an extreme drop from two to one children per woman would reduce consumption by just 8.7 per cent, and only after several decades of adjustment. On the flip side, pushing fertility back to replacement level would actually reduce living standards for around forty years before benefits arrived (think about how long it takes kids to turn into net taxpayers), making pro-fertility interventions a tough sell for current voters and politicians alike. But don’t be dissuaded: this parental time analysis has a cool chart showing that parents substitute sleeping and relaxing with childcare, but ultimately end up happier because of it. The doom, as ever, is somewhat overstated. Something for the weekend | Fixing fiscalIf you haven’t yet noticed that there is a Spring Forecast in under two weeks then the Treasury (which confirmed this week that the aim is for it to be “as boring as possible”) will be delighted. Our best guess is that modest economic news since November will offset to leave borrowing in roughly the same place. Consensus on our panel was that – with signs of revival in the private sector – avoiding speculation about tax and spending is positive. But while one fiscal event a year is welcome, it isn’t the only thing that needs changing about the UK Budget process. The Treasury Select Committee are reviewing the Office for Budget Responsibility (OBR) 15 years on. Our response estimates that independent scrutiny of the public finances saves tens of billions a year, so it is welcome that Reform’s Chancellor in waiting has settled on retaining it. Resources of the OBR should be increased, starting at the top – equivalent ‘Budget Responsibility Committees’ in other countries have on average six members, while the OBR has three (currently two, advert pending). One particularly valuable reform would be publishing the OBR’s premeasures forecast ahead of the Chancellor’s statement, reducing the sort of damaging speculation we saw in the Autumn that first and foremost arose from selective briefing of the forecast. This could be especially powerful if combined with other ideas to improve the Budget process, like having it on a fixed date each year. We also got thoughtful contribution on the fiscal framework this week from the IFS, suggesting a traffic-light system of many indicators could be better than the pass/fail of fiscal rules – but crucially only for the next Parliament if (big if?) the UK has restored some fiscal credibility. I worry that a useful traffic light, in the end, needs to provide a binary signal. In the meantime, the lights are flashing red. For more, tune in to a former OBR Chair double act next Wednesday. Chart of the week Things have felt a little miserable recently – not least because of the record-breaking rain. So, between that and the wealth of data dumped on us by the ONS this week, we thought it was about time we updated the Misery Index – that measure of economic distress that adds inflation and unemployment. We don’t yet have confirmed unemployment data for January, but if we assume it held steady at 5.2 per cent, while CPI dropped by 0.4 percentage points, we will actually have seen a big fall in the index, which has been ticking down since September last year. Phew! Unfortunately, misery levels remain high. Higher misery is only found in periods of pretty big shocks, like the spike in energy prices or the global financial crisis. Hopefully there are brighter days ahead…
