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A “robot revolution” will transform the global economy over the next 20 years, cutting the costs of doing business but exacerbating social inequality, as machines take over everything from caring for the elderly to flipping burgers, according to a new study.

As well as robots performing manual jobs, such as hoovering the living room or assembling machine parts, the development of artificial intelligence means computers are increasingly able to “think”, performing analytical tasks once seen as requiring human judgment.

In a 300-page report, analysts from investment bank Bank of America Merrill Lynch draw on the latest research to outline the impact of what they regard as a fourth industrial revolution, after steam, mass production and electronics.

“We are facing a paradigm shift which will change the way we live and work,” the authors say. “The pace of disruptive technological innovation has gone from linear to parabolic in recent years. Penetration of robots and artificial intelligence has hit every industry sector, and has become an integral part of our daily lives.”

However, this revolution could leave up to 35% of all workers in the UK, and 47% of those in the US, at risk of being displaced by technology over the next 20 years, according to Oxford University research cited in the report, with job losses likely to be concentrated at the bottom of the income scale.

“The trend is worrisome in markets like the US because many of the jobs created in recent years are low-paying, manual or services jobs which are generally considered ‘high risk’ for replacement,” the bank says.

“One major risk off the back of the take-up of robots and artificial intelligence is the potential for increasing labour polarisation, particularly for low-paying jobs such as service occupations, and a hollowing-out of middle income manual labour jobs.”

The authors calculate that the total global market for robots and artificial intelligence is expected to reach $152.7bn (£99bn) by 2020, and estimate that the adoption of these technologies could improve productivity by 30% in some industries.

The robotics market is expected to be worth $66.9bn by 2025

They point out that Google bought eight robotics companies in a two-month period in 2014, from Boston Dynamics, which makes the BigDog robot, to DeepMind, specialising in deep learning for artificial intelligence.

In the most advanced manufacturing sectors – among Japan’s carmakers, for example – robots are already able to work unsupervised round the clock for up to 30 days without interruption. While offshoring manufacturing jobs to low-cost economies can save up to 65% on labour costs, replacing human workers with robots saves up to 90%.

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