No fiscal early-warning capability for AI-driven tax-base erosion

Income tax and NICs supply nearly half of UK receipts, and DSIT's own assessment puts ~70% of UK workers in AI-exposed roles, the highest of comparable economies because of the UK's services weighting. The OBR has explored AI productivity upsides but publishes no systematic displacement-driven downside fiscal scenario; no HMT/HMRC workstream examines value migrating to US AI firms via low-tax jurisdictions (the tax-base erosion mechanism at the core of the Europe-2031 scenario). No institution owns the question 'what happens to UK receipts if white-collar labour income compresses?'

Fiscal stress arrives before labour-market statistics register crisis: hiring freezes cut receipts years before unemployment peaks. Without modelled scenarios, the Treasury will meet AI-driven erosion with ad-hoc cuts rather than prepared instruments: the exact sequence the Europe-2031 report projects for services-heavy economies.

A mandate for the OBR to publish AI downside scenarios in its Fiscal Risks and Sustainability reports; a standing HMT/HMRC analysis unit on AI tax-base resilience covering wage-share shifts, profit attribution by AI firms, and evaluation of instruments such as IPPR's worker support levy.

// State-led: Instrument: OBR mandate change plus a standing HMT/HMRC analysis unit.

Half of receipts come from taxing wages most exposed to AI, yet nobody models the downside; the fix is cheap but the erosion compounds slowly with no dated trigger.