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European Edition
18th June 2024
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Investment in UK has trailed other G7 countries since mid-1990s, IPPR says
The Institute for Public Policy Research (IPPR) says investment in the UK has lagged other G7 countries including the US and Germany since the mid-1990s. The thinktank urges Labour and the Conservatives to reverse planned cuts to investment or risk long-term damage to economic growth, and says the next UK government should “lead from the front by designing and delivering high-quality public investments to crowd in private sector funds, especially into industries of the future like electric vehicles and renewable energy,” adding “Likewise public sector investments in education, infrastructure and healthcare are needed to create the right conditions for growth.” The IPPR analysis also showed the UK ranked 28th for business investment out of 31 OECD countries. Slovenia, Latvia and Hungary attracted higher levels of business investment in relation to the size of their economies. Among OECD countries, only Greece, Luxembourg and Poland were ranked lower for business investment than the UK over the last three years.
Navigating the NIST AI Framework

In the ever-evolving landscape of cybersecurity, the rapid advancements in artificial intelligence (AI) have brought both tremendous opportunities and significant risks. To effectively manage these risks, cybersecurity professionals and IT managers are evaluating several existing frameworks to adapt their processes to this new landscape. The National Institute of Standards and Technology (NIST) has released the NIST AI Risk Management Framework (RMF), a framework with the goal of helping organizations manage AI risk.

In this guide, we will provide a comprehensive overview of AI risk, the challenges you might run into, and how NIST AI RMF will help safeguard AI systems.

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IMF calls for excess profits tax to balance effects of AI
A report by the International Monetary Fund (IMF) suggests that governments should introduce taxes on excess profits and a green levy to make up for AI-related carbon emissions and the impact of the technology on jobs. “Given the large amount of energy consumed by AI servers, taxing the associated carbon emissions is a good way to reflect the external environmental costs in the price of the technology,” the IMF said. The report went on to advise against taxing investment in AI but suggested raising capital income taxes such as corporation tax and personal income taxes on interest, dividends and capital gains. This would support the anticipated increase in welfare spending due to job losses from AI, the IMF said.
G7 to launch initiative on AI's impact on labour
Group of Seven (G7) leaders have announced an action plan to deal with the positive and negative effects of AI on employment. The leaders of Britain, Canada, France, Germany, Italy, Japan and the United States plus the European Union said they welcomed the support from countries outside the G7 forum for the Hiroshima AI Process, an international rulemaking framework for generative AI led by Tokyo which was established at last year's G7 summit, saying that they recognize the importance of advancing the framework's outcomes. More than 50 countries and regions have signed on to the framework. This year's G7 discussions have focused on the potential benefits of AI to labour and the risk of the technology depriving people of work. G7 leaders said Friday that they will "work to ensure that AI enables increased productivity, quality jobs and decent work."
EU's 'lie detector test' raises concerns among holidaymakers
Civil rights groups and politicians across the European Union have criticised the EU's proposed "lie detector test" scheme for border security. The scheme involves using artificial intelligence-powered software to analyse passengers' body and facial movements at airports and ferry ports. If the software detects what it deems to be suspicious behaviour or suspected lies, the passenger's file is flagged for further checks and potential refusal of entry. The technology will be phased in after the implementation of an initial Entry-Exit System and a visa-waiver scheme. The proposal has already undergone successful trials, but it has faced criticism for being potentially discriminatory. German MEP Patrick Breyer dismissed the scheme as ineffective and likely to discriminate against disabled individuals and those with anxious personalities. The use of AI technology in border security is not prohibited by the EU's Artificial Intelligence Act, which establishes a common regulatory and legal framework for AI within the bloc.
AI 'is being made more accountable'
Changes in compensation policies and the growing influence of a British government-backed safety group are leading to better oversight in the AI industry, writes Parmy Olson for Bloomberg. The author notes that the UK's AI Safety Institute (AISI), the world's only state-backed entity in the field, is testing AI models for national-security risks, and while the mechanisms for whistleblowing in AI still have room for improvement, the progress made so far "is a cause for celebration."
NHS warns patients of blackmail threat after cyber attack
The NHS has warned nearly 150,000 patients in Dumfries and Galloway of a serious threat after their health records were leaked online in a suspected cyber attack. The leaked data includes test results, internal correspondence, and complaints records. The health board admits that patients may be targeted for extortion by the hackers or others who have viewed their records. The attack, which occurred in February, involved ransomware and the publication of data on the dark web after the hackers' demands were rejected. The health board now fears that the number of affected patients and staff is far higher than initially estimated.
Adidas investigates bribery allegations in China
Adidas is investigating potential corruption in China following an anonymous letter exposing alleged compliance violations by some employees. The German sportswear company, which experienced growth in China before the pandemic, has returned to growth in recent quarters. The anonymous letter, allegedly written by Adidas China employees, named several Chinese employees involved in marketing and claimed that kickbacks were received from external service providers. “Adidas takes allegations of possible compliance violations very seriously and is clearly committed to complying with legal and internal regulations and ethical standards in all markets where we operate," the company said in a statement.
Deep links between European finance and politics
A study by Ernst & Young has revealed the close connections between finance and politics in Europe. The study found that French and Swiss finance firms are more likely to have former politicians as board members compared to their European counterparts. A third of Swiss firms and 30% of French firms have at least one board member with ministerial or parliamentary experience. This is in contrast to just 14% of German firms, 13% of Italian firms, and 11% of UK firms. The study also highlighted concerns over conflicts of interest and the "revolving door" phenomenon between politics and finance. Despite this, many argue that the exchange of expertise between the public and private sectors is essential for building trust. The study also found that banks are better equipped with political and macroeconomic expertise compared to insurers and asset managers.
The growing case to embed climate risk in finance teaching
Some 88% of senior finance professionals believe it is “very important” or “essential” for financial decision making to address the opportunities - and risks – associated with environmental and social issues.
Cambridge considers cutting ties with Barclays and Lloyds over fossil fuel investments
The University of Cambridge is reportedly considering severing its ties with Barclays and Lloyds due to concerns over the banks' investments in fossil fuels. Leaked documents from a council meeting at Cambridge's King's College revealed that the university is exploring alternatives to the two banks and is part of a concerted effort to pressure major UK banks to improve their practices. The university has pledged to divest its £4bn endowment from all direct and indirect investments in fossil fuels by 2030.
Stellantis reverses remote work policy for auto engineers
Stellantis has reversed its remote work policy for auto engineers and now requires them to be back in the office. The company's CEO, Carlos Tavares, had previously championed remote work to cut expenses. “It's impossible to engineer vehicles remotely,” said Ned Curic, who heads engineering and technology at Stellantis. “You have to have people together. You have to do design sessions, engineering sessions and the build-ups together. It helps us accelerate a number of projects.” The company had drastically reduced office space and sold real estate assets as part of its remote work push, and in 2022 said its remote-work policy had become permanent, allowing non-assembly line workers to work from home 70% of the time. “Remote working is very flexible within Stellantis, depending on the need to work more or less often physically together,” a spokesperson for the company said. “There is a delegation to the management to establish the conditions of the best possible performance.”
London drags down UK productivity
London dragged down UK productivity growth between 2019 and 2022. The trend pushed the efficiency gap between the capital and the rest of the UK to its lowest level on record.
HMRC fails to fine offshore tax evasion enablers
HMRC has failed to impose fines on any offshore tax evasion enablers in the past five years, despite being granted greater power to do so. New laws introduced in 2017 were expected to create a level playing field and allow HMRC to pursue accountants, lawyers, and bankers involved in offshore tax evasion. However, figures show that no fines have been issued under the enhanced powers. While HMRC last year said it had raised an additional £34bn through tackling tax avoidance, evasion and other noncompliance, the tax office has been criticised for failing to properly deploy new laws to crack down on avoidance. Michelle Sloane, a tax disputes partner at law firm Reynolds Porter Chamberlain, said: "Enablers were and still are a big focus for HMRC. But these figures show their rhetoric on tackling enablers is clearly not being followed through with action." Dan Neidle, founder of the independent think-tank Tax Policy Associates, commented: "New HMRC powers are pointless if the powers aren't then used." The UK's tax gap - the difference between tax paid and owed - stood at £36bn in 2021/22 and both the Conservatives and Labour say they will look to boost Treasury coffers by cracking down on evasion.
MindGym's revenues slump amid decline in diversity spending
A decline in spending on corporate diversity, equity and inclusion programmes has led to a slump in revenues for MindGym, the workplace training company hired by FTSE 100 and S&P 100 companies. The business reported an 18% decline in revenue. Its US operations were particularly impacted. MindGym also blamed the poor performance on increased caution around how human resources departments spend their budgets. Octavius Black, the company's founder, said: “Business leaders are giving greater scrutiny to HR investments which has extended buying cycles and in some cases recalibrated overall spend. For example, during the year we won a number of large projects only for our HR client to then discover that their budget had been altered and so the scope needed to be reduced or the programme postponed.” MindGym observed that businesses now require an increasing number of stakeholders to sign-off on HR budgets and want to see more evidence about the feasibility of projects before signing off on them. Black also said MindGym now operates in a more “crowded market” following record investment in HR platforms and technology. 
Party supplies retailer on edge of collapse
Wonder Group, previously known as Amscan, is on the verge of administration as it faces a downturn in consumer spending. The party supplies retailer and distributor is preparing to file a notice of intention to appoint Interpath Advisory to handle the insolvency process. Falling demand in international markets for party and costume products has affected the company. Wonder Group, which employs about 200 people in the UK, may have to sell off some of its assets. The company had set a revenue target of £500m by 2026 after acquiring Party King. Investment firm Endless, which backed the buyout of Wonder Group in 2021, declined to comment on the potential job losses. Smiffys, another player in the sector, is also on the brink of collapse. The firm brought in PwC as administrator last month.
UBS sets aside €900m to repay Credit Suisse customers
Swiss banking giant UBS has set aside €900m to help repay former Credit Suisse customers who were trapped in funds frozen after the collapse of Greensill Capital. UBS will repay investors 90% of the money tied up in funds. The repayment window is open until July 31. The provision will not affect UBS's profits. The funds were launched by Credit Suisse and sold to professional investors seeking exposure to the supply chain finance sector.
Lendinvest issues profit warning after accounting error
Lendinvest has issued a profit warning for its 2024 financial year after an accounting error related to a £5m securitisation deal meant it had to revise down expected gains from the deal. The firm explained that the issue related to “swap and hedge accounting assumptions that include mark-to-market adjustments and fair value hedge accounting applied as part of the derecognition calculation.” Lendinvest expects to return to profitability in its 2025 financial year, as previously forecast.
Moody’s pulls rating from heavily indebted Cheshire council
Moody’s has removed its credit rating from Labour-led Warrington Borough Council due to its failure to have its accounts signed off by external auditors. The council is £1.8bn in debt and has come under scrutiny for a number of its "uniquely complex" investments. Following Moody's withdrawal, the authority said it was seeking to secure an alternative rating from another EU-recognised ratings agency.

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