Spending

• Former Microsoft AI leaders and the team behind the $160 million Maluuba acquisition have launched Skyfall AI. • The venture plans to spend $1 million to acquire a SaaS company and appoint an AI agent as its CEO to manage operations. • This experiment aims to prove that agentic AI can handle executive leadership, challenging the founders' own current view that today's LLMs are not yet fully competent.

• The UK government has scrapped its digital ID scheme to redirect funding toward cost-of-living relief for households. • The decision follows the appointment of Andy Burnham, who is prioritizing immediate financial support for citizens over the digital infrastructure project. • This shift reflects a strategic pivot in government spending to address urgent economic pressures facing the public.

• Big Tech companies are facing mounting pressure from investors to justify massive AI expenditures following a significant selloff in technology stocks. • The Nasdaq 100 Index dropped 4.1% last week, while the S&P 500 fell 1.6%, driven largely by a 10% plunge in the Philadelphia Stock Exchange Semiconductor Index. • This downturn marks the worst weekly performance for chip stocks since April 2025, signaling growing skepticism among traders regarding AI's immediate returns.

• The IMF has warned the UK against increasing public spending amid growing pressure to provide energy support for households. • The organization urges the government to ensure any aid is targeted and temporary, and offset by equivalent budget savings to maintain fiscal discipline. • This warning creates a potential conflict with the priorities of Burnham, who has indicated that cost-of-living support will be a primary focus upon entering Number 10.

• IBM shares plummeted 25% following a warning that corporate spending is shifting away from software toward artificial intelligence and cybersecurity. • Despite a strong Q1 where software revenue rose 11% to $7.05 billion and earnings beat estimates, the company admitted it has "faltered" as budgets are redirected. • This downturn threatens IBM's long-term strategy to reduce hardware dependence by leaning on software units like Red Hat for multi-cloud application management.

Effort is latest attempt to pass bill that seeks to ban mail-in ballots and imposes voter identification requirementsHouse Republicans on Wednesday made another attempt to answer Donald Trump’s demand for new restrictions on voting nationwide by linking the measure to an unrelated spending bill and passing both largely along party lines.The effort was the latest attempt by congressional Republicans to pass the Save America Act, which would ban mail-in ballots and impose new identification requirements on voters when they register and cast ballots. While the Trump administration has cast the bill as necessary to prevent non-citizens from voting and combat election fraud, voting rights advocates say there’s no evidence of widespread election tampering and warn the bill could disenfranchise swaths of eligible voters ahead of November’s midterm elections. Continue reading...

• IBM shares plummeted on Tuesday after CEO Arvind Krishna admitted that shifting priorities in the AI economy are negatively impacting the company's core business. • Krishna stated in a shareholder letter that IBM failed to anticipate the scale of capital expenditure reprioritization as clients pivot their spending. • The company noted that customers are increasingly distracted by urgent cybersecurity needs triggered by new AI-driven threats, further diverting resources.

• IBM reported an earnings miss, attributing the shortfall to a failure to adapt and move quickly enough in the evolving AI market. • The results indicate a shift in enterprise spending, where companies are cutting traditional software budgets to prioritize expensive AI hardware investments. • This financial pivot is forcing development teams to rely on open-source tools and build custom integrations rather than purchasing proprietary software.

• IBM warned that customers are shifting their budgets away from software and toward AI infrastructure, including servers, chips, and data centers. • This shift triggered a selloff in software stocks as investors worry that AI spending is squeezing traditional software budgets. • Market analysts, including IG Group's Chris Beauchamp, describe the situation as an "ugly moment" for the sector, highlighting a pivot toward cybersecurity and hardware.

• Cybersecurity stocks experienced a rally following comments from IBM CEO Arvind Krishna regarding shifts in corporate spending. • Speaking with CNBC's Sara Eisen, Krishna revealed that several major deals were paused toward the end of the quarter as businesses re-evaluate their budgets. • This trend highlights a broader strategic pivot where companies are rethinking how to allocate funds, specifically shifting focus toward AI integration.

• Wells Fargo reported strong Q2 earnings, prompting the bank to plan an 11% dividend increase and $3 billion in stock repurchases. • CEO Charlie Scharf noted that American consumer spending remains robust despite ongoing inflation concerns, though the bank is pursuing a measured growth strategy to withstand future market volatility. • The company reaffirmed its 2026 outlook, projecting net interest income of approximately $48 billion (excluding Markets) and $2 billion from Markets.

• LTM reported strong revenue growth and margin expansion for Q1 FY27, driven by a surge in corporate AI spending and strategic hiring initiatives. • According to Venu Lambu, clients are prioritizing AI-led software engineering to accelerate product development and increase throughput velocity. • This shift matters as it demonstrates how AI is being integrated into core business operations to deliver products to market at a significantly faster pace.

• UK government officials are considering merging the upcoming autumn Budget with a comprehensive spending review to streamline fiscal planning. • The move aims to establish clear tax and spending priorities for the administration leading up to the next general election. • This strategic alignment is being explored ahead of Andy Burnham’s expected transition into Downing Street later this month.

• Microsoft has started deploying its own in-house MAI models to reduce reliance on expensive third-party AI services from providers like OpenAI and Anthropic. • This strategic shift comes as the tech industry faces a general spending pullback due to the escalating costs of maintaining high-performance AI infrastructure. • The move highlights a broader trend where companies are seeking cheaper alternatives, with some even risking security concerns by utilizing lower-cost Chinese models for agentic tasks.

• Global cybersecurity spending is projected to reach $240 billion by 2026, according to a new report from IDC. • The rise of AI and post-quantum security is forcing organizations to redefine their cybersecurity framework selections to combat evolving threats. • AI has fundamentally shifted the landscape, with threat actors now using the technology to automate phishing, accelerate vulnerability discovery, and launch model poisoning attacks.

Next Labour leader, who is set to be elected unopposed, outlines foreign policy principles largely in line with StarmerBurnham promises he will not use party discipline to stifle debateGood morning. Andy Burnham is due to become Labour leader a week tomorrow and, as nominations open for a leadership election that will not happen because Burnham is set to be elected unopposed, we are learning a bit more about how he intends to lead his party and his country.Yesterday, in a letter to Labour MPs, Burnham told them he would never use party discipline to “stifle debate” and says they should raise problems and policy ideas “without fear or favour”. Jessica Elgot has the story here.Burnham says he wants a “more open” public debate and scrutiny of defence spending. He says:Doing politics differently means levelling with the public, engaging them in decisions and ensuring more social value in return for increased government spending.I want to be more open with the public about how and where defence funding is spent. For our biggest defence and infrastructure projects, I want to see more detailed, public progress updates, with more transparency and accountability to tackle cost overruns or delays before they spiral out of control. Our increased investment must be combined with an increase in scrutiny.Burnham confirms he will keep Jonathan Powell in place as national security adviser.He says national security will be his “first priority if I become prime minister”.He says he wants to use higher defence investment to boost economic growth.In response to the evolving threats we face, and as we meet our Nato commitments, it is right that we rebuild our hard power for a new era that is very different to the one in which much of our current military equipment was first designed.Crucially, as we do so, I want to ensure we back British workers and businesses. This means we must go much further than ever before through the defence investment plan in backing British resilience, using a sustained increase in defence investment not only to provide the kit our armed forces need, but also to generate economic growth and create apprenticeships and jobs in communities that have seen opportunities drain away …Burnham says he wants an “even closer relationship” with European countries on defence.I want an even closer relationship with countries across Europe, working more through European-led groupings, such as the E3 (the UK, France and Germany), strengthening the European pillar in Nato and breaking down any barriers to defence industrial co-operation.But he also says he wants the UK’s relationship with the US to remain “critical”.Our commitment to Nato and the UK’s nuclear deterrent will remain absolute. Our relationship with the US will remain critical as our most important defence and security ally. And Britain’s support for Ukraine will not waver. We know that British security and wider Euro-Atlantic security are inseparable from what happens in Ukraine.He says he wants to make “further progress quickly” in deepening relations with the EU.I want to consolidate the progress made on the existing UK-EU negotiations and make further progress quickly, including by strengthening our co-operation on illegal migration, economic security and the broader resilience of our societies to external threats — from terrorism to AI-driven disinformation.He says he wants alliances “built on values as well as interests” Continue reading...

• The U.S. Supreme Court struck down long-standing limits on the amount of money political parties can spend in coordination with their candidates in a case originating from Ohio. • These spending restrictions had been in place since the 1970s, having been originally established to combat corruption within the Nixon administration. • The ruling follows a broader legal trend, including the Citizens United decision, which prioritizes free speech by removing campaign finance restrictions.

• An Ohio court case has eliminated previous limits on coordinated spending between political parties and candidates. • The ruling follows a decision by the Trump administration to stop defending these coordination limits in court. • The Federal Elections Commission (FEC), the executive branch agency responsible for enforcing campaign rules, is now tasked with managing the fallout.

Leaders meeting in Ankara have been urged to show US president concrete steps towards increasing their budget contribution. Plus why Madonna’s new album is a triumph and Helen Hunt on her new stage roleGood morning. Nato leaders will gather in Ankara today for their latest summit after a turbulent six months, hoping to mollify an unpredictable Donald Trump, as Washington continues to pressure its allies to increase defence spending.On Friday, Trump posted a graphic on his Truth Social platform showing Nato members’ defence budgets, comparing a vast US spend of $999m (£747m) with smaller figures from European states saying the situation was “ridiculous” and “one-sided”. The US is planning to cut the number of troops and materiel it assigns to Europe in the event of a war with Russia.What is causing tension between the US and the rest of Nato? Since threatening to take control of Greenland from ally Denmark, Trump has failed to consult European leaders before the US and Israel launched their economically disastrous attack on Iran, and complained countries including the UK did not allow US jets to bomb Iran from their territory. He has bizarrely accused Italy’s Giorgia Meloni of being obsessed with him, and relations with Canada’s Mark Carney are strained after Trump voiced an interest in a takeover of the US’s northern neighbor.What are the allegations against Platner? In an exclusive Politico report, Jenny Racicot, 41, who previously dated Platner, said he forced her to have sex despite repeated objections. The report cited accounts from a man Racicot later confided in, as well as recent therapist emails, and messages where she warned an acquaintance about Platner in 2023.How has Platner responded? Platner denied the claims in a statement to Politico. “These allegations are troubling, serious, and false. Any accusation of non-consensual behavior is categorically untrue,” he said. Continue reading...

Officials admit new post-Brexit EES system is ‘not perfect’, as airports and airlines voice fears over delaysThe EU has rejected calls by airports and airlines to suspend the implementation of new fingerprinting and facial recognition border controls even though it admits there are “20 difficult spots” with queue chaos.With only a week to go before the peak summer holiday season starts, EU officials admit the new entry/exit system (EES) is “not perfect” but will tell travel industry representatives that a full suspension is “not needed” and “not possible”. Continue reading...

George Robertson warns prime minister’s defence investment plan fails to meet scale of challenge facing the UKThe former Nato chief who led the government’s defence review has criticised the prime minister’s plan to pay for it, calling the defence investment plan (Dip) insufficient and overly delayed.George Robertson, the former Nato general secretary, told MPs on Tuesday the Dip had damaged confidence in the defence industry and among Britain’s allies who are gathering in Ankara this week for the Nato summit. Continue reading...

Meeting of 32 member states comes at crucial time for alliance after tensions with US over Iran and GreenlandNato leaders, including the moody US president Donald Trump, are set to meet in Ankara, Turkey today and tomorrow for the latest round of talks on transatlantic defence.As our defence and security editor Dan Sabbagh says, there has been “a remarkable effort behind the scenes at Trump-proofing whatever happens in Ankara” given his tendency to go into angry outbursts directed at the allies.“Trump is expected to bring 1,400 people with him to Turkey, including those responsible for bringing back his toilet waste – a standard protocol to prevent other countries analysing the material for intelligence about his health. That the US is coming in large numbers is seen as a relief, given that Trump has at times flirted with the idea of leaving Nato, including at a summit in 2018.” Continue reading...

• New data from Ramp and Revelio analyzing 21,000 firms indicates that intensive Generative AI adoption is linked to increased overall headcount rather than job losses. • The findings specifically highlight a rise in entry-level hiring, challenging the prevailing narrative that AI is primarily replacing human workers. • This shift is reshaping strategies for IT leaders, who are now focusing on how AI can augment human labor across various business functions.

Meeting of 32 member states comes at crucial time for alliance after tensions with US over Iran and GreenlandNato leaders will gather in Ankara on Tuesday after a turbulent six months. And as the US continues to pressure its allies to increase defence spending, the other 31 members of the alliance will be hoping to mollify an unpredictable Donald Trump.On Monday, Mark Rutte, Nato’s secretary general, called for the allies to present “clear, concrete and credible plans” to reach the organisation’s spending targets. “President Trump fully expects that all allies will step up immediately and get on the path to 5% and do it with urgency,” he said. Continue reading...

• Indian enterprises are projected to increase cybersecurity spending to 15-20% of their total IT budgets to combat expanding AI-driven cyber threats. • Company boards are shifting their focus from simple attack prevention to prioritizing business continuity, recovery capabilities, and overall digital resilience. • This strategic pivot occurs as AI expands the digital attack surface, elevating cybersecurity from a technical server-room issue to a critical boardroom financial and operational risk.

US ambassador to Nato has called for all allies who are ‘lagging behind’ to step up immediatelyKeir Starmer is likely to face a diplomatic row at his final major international summit this week after Washington’s ambassador to Nato called for alliance members who are “lagging behind” on defence spending to step up.The prime minister is due to arrive in Ankara on Tuesday for the annual Nato summit, where the UK commitment will be under scrutiny following the release of the government’s defence investment plan (Dip) last week. Continue reading...

Dan Jarvis, who wants to stay on as defence secretary, says he is confident PM-in-waiting values national securityThe new defence secretary, Dan Jarvis, has called on Andy Burnham to increase defence spending dramatically from 2030 and “evidence the trajectory” towards a Nato target that would mean £25bn a year more for the military by the middle of the next decade.The former paratrooper said he was confident that the prime minister-in-waiting valued national security, as he openly lobbied him for cash that would probably have to come from cuts elsewhere. Continue reading...