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The Macro Brief – The next game-changing technologies
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James Pomeroy, Global Economist at HSBC, looks at three technologies that could dramatically transform the economy in the longer term - humanoid robots, autonomous driving and quantum computing.
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Transcript
Introduction to HSBC Global Viewpoint Podcast
00:00:01
Speaker
Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends, and opportunities.
00:00:13
Speaker
Make sure you're subscribed to stay up to date with new episodes. Thanks for listening, and now onto today's show.
Macrobrief Podcast Overview: AI's Market Impact
00:00:30
Speaker
Hello, I'm Pierre Sbertler in London and welcome to The Macrobrief, the podcast that looks at the issues driving financial markets across the globe. Now, a key topic currently at the forefront of investors' minds is artificial intelligence and how is starting to impact businesses and society.
00:00:46
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But looking further out, what are some of the other technological developments that could transform the economy over a slightly longer time frame? That's what our global economist James Pomeroy has been examining in the latest edition of his Game Changers report.
00:01:01
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And he's here in the studio
Game Changers Report: Beyond AI Technologies
00:01:02
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to tell us more. James, great to have you back on the podcast. Great to be here. So firstly, remind us what the Game Changers series is about. Is it fair to say that you try and look beyond the immediate market horizon?
00:01:14
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That's exactly it. What we're trying to do with this report is say, what are the things that we're not thinking about enough? And I think in the markets at the moment, particularly in 2025, it's very, very easy to get caught up in the news flow around tariffs, around policy, around what's happening in markets themselves, when actually sometimes it's worth taking a step back, zooming out and thinking about the trends that are happening under the surface. And what we're trying to do in most of these reports, and this one in particular, is look at the trends that are building really, really slowly, but actually probably an exponential pace. And so we're going to see the impacts on the real economy much sooner than maybe I think a lot of people are thinking about.
00:01:48
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Interestingly, for once, we're not going to talk about AI, at least not directly.
Humanoid Robotics: Job Replacement and Economic Impact
00:01:52
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You've identified three areas that we should be talking more about. Firstly, humanoid robotics. Secondly, autonomous driving.
00:02:00
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and And finally, quantum computing. So let's take them in turn. Humanoid robotics, why are they a game changer? I think just quickly in terms of why we're looking at these three as a whole, I think they're all really interesting because we're seeing a sort of underlying news flow that's maybe positive, but still with the real impact on the economy being far enough out that people aren't properly thinking about them. So that's why these three, I think, all come together being quite interesting.
00:02:23
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But when we start thinking about humanoid robots, we're thinking actually about what jobs could genuinely disappear because the robotics have got quite a lot better. And I think that's something that is starting to become reality. For a long time, if you thought about what robots are capable of, they've not been in human form or human-ish in the way they look.
00:02:42
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But what that's meant is they've been unable to do lots and lots of different tasks within the economy. We're seeing these rapid improvements in what robots are capable of, but also the price of them declining. And the combination of those things is going to mean we're going to get more and more jobs or more and more tasks in the economy that are able to be done by a robot in one way, shape or form.
00:03:01
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And that's not necessarily going to be just in factories or just in warehousing or or manufacturing. It could well be in terms of making your coffee in the morning or serving you in a restaurant or doing all sorts of other tasks that could be dangerous, like firefighting or mining or all of these things.
00:03:16
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And actually that opportunity for more and more jobs that either humans don't want to do or can't do or are dangerous to be replaced by some form of robot is going to keep building. And that has quite obviously huge implications for the global economy.
00:03:30
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Okay, next one, autonomous driving.
Autonomous Driving: Productivity and Implementation
00:03:32
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I've seen lots of videos of self-driving cars in China, but really in London's traffic? One day, one day. And I think this is the sort of where we are with this, is if we speak to a lot of people who are much more learned than I am about what's happening with autonomous vehicles, they'll tell you this is a long way off. But at the same time, you've seen massive, massive increases in the usage of these vehicles in the places they are being used. so being Sorry to interrupt, but in your report, you talk about five or six stages of autonomous driving. Where are we in that in that scale?
00:04:00
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Different cars are able to do different things. So at the moment we're talking about a lot of cars which are really helping human drivers, self-parking or being lane assisting, all those sorts of things. But we're not quite on a widespread basis here of cars that are left completely to themselves without any sort of support. But you're seeing it happen in more and more places.
00:04:18
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And it's quite exciting in many ways thinking about a world in which no one needs to drive. um As an economist, we think about things always through productivity in the labour market lens and actually think about how much time people waste in many ways sat behind the wheel of a car in traffic. Actually, if you're not having to be behind the wheel of a car, that could free up some time to do something more productive.
00:04:39
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And so there is an opportunity here. But I think the challenge with autonomous driving is we're clearly accelerating really, really quickly. But whether we get to full widespread usage of these things anytime soon, I'm a little bit more sceptical.
00:04:52
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But it fits actually with why we do these sorts of reports, is we're trying to say, well, what if? And I think the what if is really worth keeping in mind that actually, yes, it might not feel like we're on the cusp of autonomous vehicles being all over the streets of London, but it's not out of the question that in 10 years' time they are.
00:05:07
Speaker
In fact, I did see an article recently talking about the threat to London cabbies from autonomous ah vehicles. Yeah, that's exactly it. There's certain jobs that are massively at risk here, quite obviously, be it taxi drivers, be it delivery drivers, be it ah long long distance haulage drivers.
00:05:24
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And so it could have quite a big disruption to the economy. But it also might mean that in many ways people want to spend more time in cars and not public transport. Because actually, you get all the benefits of public transport without the cons.
00:05:36
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And so there's potential sort of trade-off here about what that does in terms of productivity, because that journey is quite challenging. Because if you've got a lot of autonomous cars, and a lot of human cars on the road, you're going to get even more traffic, even more congestion, and then it becomes an interesting balancing act, whether it's worthwhile or not for people.
00:05:51
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Or maybe we'll have an AI traffic management system. But anyway, we could spend ages on
Quantum Computing: Economic Shifts and Potential
00:05:56
Speaker
that topic. But we should talk about quantum computing. Not long ago, the the discussion was, yes, quantum computing. It'll take years before it has a capability to crack your passwords. But should I be worried?
00:06:10
Speaker
More so now than ever. There's been huge strides in quantum computing in the last few years. We're still probably a long way off from this stuff being widespread throughout the economy, but use cases by large companies in certain places, probably not a million miles away. And you look at some of the strides being made by Google over the course of 2025 itself, actually, there's an opportunity here.
00:06:29
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Now, why do I as an economist care about this? Well, I care about it because it could massively transform the economy in terms of the second round effect. So if quantum computing allows computers to solve problems they couldn't do previously, this could unlock a wave of automation and innovation that we currently are not thinking is possible, thinking about breakthroughs in healthcare, in material science, in a whole load of things that could completely transform the global economy.
00:06:55
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in a very, very short period of time. Modelling what that does to economic growth, almost impossible. But the almost opportunity is endless if we can get round these corners in terms of some of the opportunities that start to unlock themselves. So it's a little bit harder to sort of ascertain the exact impact on the economy of this stuff.
00:07:13
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But it's clearly a positive, just quite how positive and where and when, a lot more up in the air. And maybe throwing you a bit of a curveball, but in your report, you have this chart quantum bits per processor and it's sort of like going slowly and then it sort of shoots up.
00:07:28
Speaker
yeah what What should I take away from that? I think the key with a lot of these trends is we're going exponential and humans are really, really bad at spotting exponential trends when we're living through them. We lived through them for a long time with AI and then suddenly we all looked back and went, oh, there we are. you know It's all happened.
00:07:43
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and We've had the same thing happen with a whole load of different technologies in history. And if you're at the very early stage of and of that sort of exponential curve, It's only after a short period of time you look back and things have materially changed. And in a lot of these areas, that's where we are. We're in an exponential curve, but we're so early on that you don't feel the difference on the real economy. But it means that that point in the future at which we're really going to feel it will probably happen a lot sooner than lot of people are
Job Replacement by Tech: Policy and Skill Adaptation
00:08:06
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expecting.
00:08:06
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So we've painted the blue sky, but we should address a transition, which, as you say in your report, is going to be messy, particularly when it comes to employment. So tell us a little bit more about that.
00:08:17
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Yeah, we touched on this a little bit talking about autonomous vehicles, but think about autonomous vehicles and humanoid robots. The impact on the labour market is going to be potentially massive. If you think about the number of jobs that could be replaced, you're talking about many jobs in manufacturing, warehousing, anything to do with delivery or driving, thinking about maybe some of the um customer service roles that could be replaced, thinking even in some cases about kitchen stuff. That's the sort of thing that could easily happen.
00:08:44
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And it feels like, you know, years and years in the future and something, some sort of sci-fi pipe dream. But the reality is, it wouldn't be overly surprising if that's the norm in some cities in 10 years' time.
00:08:56
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And that's the sort of speed of change you're in, but all of this has a massive negative consequence as well in terms of the people whose jobs are at risk. And the challenge here is a lot of these jobs at risk compared to something like AI or even the quantum computing risk as those sort of service jobs broaden out, is a lot of the jobs that are going to be at risk here are lower skill, physical labour jobs.
00:09:17
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And this becomes an even bigger problem because if those jobs are lost or those jobs are just taken away, then the people are with those jobs today may find it harder to get the jobs that are created in the economy. Do you see evidence from policymakers, particularly in developed economies, that they're starting to think about about that challenge? I mean, I know, i think there was one Scandinavian country that looked, experimented on the universal basic income as ah it's a way of addressing that. but Yeah, we've seen a few trials. around things like universal basic income that could end up being a solution for sure. It's certainly something that's going to certainly be more discussed in this world.
00:09:51
Speaker
But also we're going to have to think a lot more about investing in skills and training and education. And that is something that governments so far have been pretty poor at doing, quite frankly. There's a few examples. Denmark is a great example of doing this quite well.
00:10:03
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But Broadly, we're going to have to think seriously about where are the jobs of the future going to be in the economy over a 10, 15 year time horizon and adjust education systems today, because that's something that's got to change very, very quickly.
00:10:15
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We're just to have to think about how can we get people who are displaced from their jobs trained up in the shortage the areas of the economy where there are shortages quickly to allow them to stay in the workforce. These are questions that we're going to have to deal much more readily with because the impact on the labour market of these technologies in the next few years is going to be much more tangible.
Tech Gains vs Economic Inequality: Fiscal Challenges
00:10:33
Speaker
yeah know We've had lots and lots of discussions over the last three or four years about AI's impact on the labour market. and We've put reports out saying we can see it around the edges, but it's around the edges. If suddenly you have humanoid robots that are capable of doing a lot of tasks that humans do today, those jobs are just gone.
00:10:47
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ah You won't need anyone to stack the shelves in the supermarket. you won't need anyone to work in warehousing. Those jobs are gone. They're not just at risk, they're gone. And that is a far more tangible impact on the labour market than anything we've talked about with AI in the last few years.
00:10:59
Speaker
Do you think that the yeah productivity boom that some of this technology is going to bring is going to be a bit of an offset? Because obviously, developed economies have their fiscal challenges already. ah How are they able to kind of finance some of these measures?
00:11:12
Speaker
Yeah, this is exactly it. You need that productivity gain, which is obviously a good thing, potentially could help lift global growth. But the challenge is how can governments get the revenues from that? And that might require shifts around who's paying taxes. Is it corporate taxes? Is it profit taxes?
00:11:27
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It could mean that we see this continue widening out between the real economy and the people who were sort of a... benefiting from higher asset prices or companies benefiting from these things. That is my biggest concern here, actually, that we could well see a world where even more of the gains accrue to an even smaller share of society, be that the larger corporates versus the small companies, or be that the um asset holders versus the workers.
00:11:52
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And actually, these technological changes, like we've seen in history, have always accelerated that trend. And if you're going through these this period where you've got multiple big technological shifts happening at once, you know, these three things, plus AI, plus whatever else comes through in terms of technological innovation, then that actually becomes a massive problem for the economy.
Digital Connectivity and Cybersecurity Risks
00:12:09
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So what you might well see is, yes, economic growth is stronger,
00:12:12
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But does that necessarily help governments in terms of raising the revenues they need to pay for their commitments to their population in terms of pensions, in terms of health care and all these things? It might be a lot harder than that. Something for governments to address.
00:12:25
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The other sort of concern, I guess, is that ah all of this increases the always-on digital interconnectedness and as a result, the exposure to cyber attacks.
00:12:36
Speaker
I mean, everything is connected now and it's all online and everything and we're always on. Exactly. And when you start thinking about the implications of some of this stuff, if you've got autonomous vehicle fleets or you've got humanoid robots doing certain tasks,
00:12:48
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the impact of hacking or the impact of a cyber attack or whatever else could potentially be much greater as well, quite adverse for people. And I think that's something that's got to be really, really carefully looked at. And I think actually as more and more of the economy becomes digitized in one way or another,
00:13:03
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The risks from the disruption of cyber attacks builds, but also the impact of a cyber attack builds. If a company gets hacked today and we see this disruption, the impact can be frustrating for many consumers or whatever else.
00:13:15
Speaker
That's a very, very different story if you're talking about whole systems, whole whole sort of road networks, you're talking about whole sections of the employment in certain areas just not working.
Energy Needs and Benefits of Quantum Efficiency
00:13:24
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Yes. You know, it could be massively disruptive. So more likely to happen and more damaging when it happens. So we're going to probably also therefore need to see even more money spent protecting against cybercrime and protecting against these attacks, which actually weighs on some of that productivity gain.
00:13:40
Speaker
So actually what you might well see is companies having to invest and protect against these things, offsetting quite a lot of the product productivity gains, having to do that. So again, there's this on paper positive, but it gets rolled back by a lot of some of these negatives that are coming through.
00:13:54
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Let's finish on our nine themes. ah This relevance is obvious in themes like automation, disruptive tech and future transport. um But what about the others? ah Firstly, demographics and future cities.
00:14:07
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So demographics is a really interesting one because we've written about this from two perspectives in the last few years. One is shrinking workforces that are going to become the norm in most economies. Well, actually, losing some jobs to automation is necessary.
00:14:19
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But there's a question actually is where we going to need workers in the economy is going to be growing in sort of elderly care essentially. And those are jobs that we don't necessarily want to give to robots because you want to know them with that human touch, human emotion. And that could be quite interesting.
00:14:35
Speaker
But also none of this solved government's fiscal problems. As we sort of alluded to, actually, one of the other challenges of ageing populations is we've got these enormous bills to pay in terms of pensions, health care and and social care.
00:14:47
Speaker
But unless you're able to raise more tax revenue from this productivity gains, those black holes don't get fixed. So actually, you might fix almost the growth side of the economy, the output side of the economy, but we're not necessarily going to be able to fix that side of things.
00:14:59
Speaker
On the future cities, This could genuinely, on the autonomous vehicle side, completely rethink how we think about cities. Actually, if you were at one point in the future, this is not 2026, this is 10, 15 years in the future, but most cars on the road are autonomous.
00:15:14
Speaker
And electric. And electric, exactly. We're not going to need anywhere near as many car parking spaces. Because these cars will will be used much, much more. They're not going to sat idle for very long. And so actually, if you need way fewer and car parking spaces, well, what does that do to think about urban design?
00:15:30
Speaker
But it's 15, 20 years down the line. This is not a story for today. But city planners and governments are going to have to start thinking about that sooner rather than later. Now on digital finance, I have one sentence for you.
00:15:42
Speaker
Harvest now, decrypt later. That absolutely terrifies me. Yeah, there's a lot of worries around digital finance when it comes to quantum computing. so essentially the ability to to basically do more harm.
00:15:54
Speaker
And so there's this worry out there that you could see a lot of financial data, a lot of personal data collected today that can't be hacked into, can't be decrypted today, could be in the future.
00:16:05
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So there's almost worry out there at the moment among some cybersecurity experts. There's a lot of parts of the financial system that have already been compromised, but we don't know it yet because no one can do anything without data. So at some point in the future, we could see the impact of that.
00:16:17
Speaker
So there's a few things out there where I think we do have to be cautious. so And then finally, energy transition. All of this surely increases the demand for power. Do we have enough power? It it does quite clearly. And I've been quite optimistic about this in lot of the game-changer reports we've written in the last few years. We're really optimistic about the spread of solar power.
00:16:35
Speaker
But on the demand side, clearly, the much more digitised economy is going to need more power, going to need more electricity supply. But actually, quantum computing super interesting. Because it's so efficient and so powerful, it actually needs less energy.
00:16:47
Speaker
So might actually help to offset some of that. And equally in terms of the broader energy transition, all these autonomous vehicles are going to be electric. So you might actually accelerate the shift from petrol cars to electric cars because people want these autonomous features.
00:17:00
Speaker
So reasons for caution, don't get me wrong, but there's also some potential upsides for energy transition coming through from these changes.
Growth through Tech: Risks and Policy Management
00:17:08
Speaker
So just to wrap it up, broadly optimistic, pessimistic outlook?
00:17:12
Speaker
after having doing all that work? This is very economist answer, but it is really is a bit of both. it's ah At the moment, you've got a sense of, yes, there's these huge possibilities for growth and productivity and breakthroughs that come from this stuff, but the downside risks do make me a lot more nervous. And actually, the comparison is pretty obvious with something like AI, where I think it's easier for me to see the tangible upsides without quite the same tangible downsides.
00:17:34
Speaker
With these sort of technological breakthroughs, I think it's much more even handed. The upside risks are probably greater, the downside risks are probably greater. And a lot is going to come down to whether policy can manage that transition as well as it needs to.
00:17:45
Speaker
Fascinating times to be living in. James, thank you very much for updating us. Thank you very much.
Sister Podcasts and Listener Engagement
00:17:53
Speaker
A couple of quick reminders now. Firstly, don't forget to check out our sister podcast, Under the Banyan Tree, where hosts Fred Newman and Harold van der Linde put Asian markets and economics into context.
00:18:04
Speaker
Secondly, if you're a client of HHPC Global Investment Research, then please download our mobile app. It features all of our latest reports, videos, and podcasts. And it can now read out research to you with its listen functionality.
00:18:19
Speaker
Just head to Apple's App Store or Google Play to download it. And finally, if you have any questions or comments, you can get in touch with us at askresearch at hsbc.com.
00:18:32
Speaker
So that's it from us this week. From all of us here, thanks for listening, and please join us again next week on Macrobrief.
Podcast Conclusion and Subscription Encouragement
00:19:01
Speaker
Thank you for joining us at HSBC Global Viewpoint. We hope you enjoyed the discussion. Make sure you're subscribed to stay up to date with new episodes.