AI specialist hiring grew eight times faster than total job hiring globally in 2025, according to PwC's 2026 Global AI Jobs Barometer. The UK government has launched a response: a City skills compact requiring financial services employers to undertake structured AI retraining, The Guardian has reported.
Lloyd's of London is among 17 founding signatories. The compact requires each firm to draw up rolling three-year plans covering training in up to five skills, with AI mandatory among them. All training must take place during working hours, and firms cannot count graduates or apprentices towards their targets.
Other founding signatories include Standard Chartered, Yorkshire Building Society, the London Stock Exchange, Nationwide building society, and asset manager Fidelity. The 17 current signatories collectively cover approximately 500,000 City workers. The first reporting deadline falls in November, when firms will also designate at least one senior executive to oversee their internal programmes.
UK financial and professional services, which includes insurance and reinsurance, accounts for approximately 11% of total economic output. The sector employs approximately 2.5 million people, according to TheCityUK.
Job cuts add urgency to compact
Allianz Partners confirmed plans to cut between 1,500 and 1,800 jobs. The reductions are concentrated among its 14,000 phone-based claims and customer service staff, the roles most exposed to AI automation in the insurance sector.
Morgan Stanley estimated that AI could put more than 200,000 European financial services jobs at risk by 2030, approximately 10% of industry roles.
PwC's barometer found that 49% of CEOs expect AI to reduce junior hiring over the next three years, versus 12% for senior roles. Entry-level vacancies in the most AI-exposed positions have flatlined globally, with the few that remain now requiring leadership and strategic capabilities. Insurance underwriters are among the roles shifting toward reviewing AI outputs and managing complex exceptions, as AI handles initial risk assessment.
Early careers hiring hits decade low
London market early careers hiring fell 25% in 2025, with a further 25% decline forecast for 2026, according to the London Market Group. The proportion of under-30 workers in the market could fall from 24% today to just 7% by 2030 if the trend continues.
Standard Chartered, also a founding signatory, announced 7,000 job cuts in May, partly attributed to AI. Its chief executive, Bill Winters, apologised after describing the move as "replacing, in some cases, lower-value human capital." The firm's decision to join the compact signals that displacement alone is not seen as a workable path for the sector.
Case for reskilling over replacement
Claire Tunley, chief executive of the Financial Services Skills Commission, compared the compact to the construction industry's training board of the 1960s. "I don't think we've seen the likes of this in a generation," she told The Guardian. Skills gaps are not new for the City, Tunley added, but the pace of AI-driven change has created challenges without recent precedent.
"We need the capabilities. And if we don't build them, we are going to be held back with innovation, with growth, competitiveness … and we've proven that investing in upskilling your existing workforce is the fastest and most efficient way to get the skills you need," she said.
Tunley said the Financial Services Skills Commission hopes the entire City will follow suit. Annual reports to the Treasury will give the sector its first systematic data on how quickly City firms are closing the AI skills gap. The November tracking deadline marks the sector's first formal reckoning with its AI readiness for Lloyd's market participants, underwriters, and claims professionals.
