On the evening of August 18, phones across the UAE lit up with an emergency alert. The Ministry of Defence later confirmed that two ballistic missiles had been launched from Iran towards the country, one falling outside territorial waters and one inside.

It was the first such warning in over a month, and it landed a day after the 14-point memorandum of understanding (MoU) between Washington and Tehran expired with no successor agreement in place.

By the next morning, Abu Dhabi had imposed an indefinite trade embargo on Iran. Tehran had denied firing anything at all. A Shakira concert in the capital was cancelled along with the festival built around it.

That is the backdrop against which Dubai is currently asking its residents to invite their relatives over for a holiday.

Launched on July 20 by the Department of Economy and Tourism, A Dubai Invite offers UAE citizens and residents a package of hotel, dining, and attraction benefits worth more than AED 3,000, or roughly USD 800, if a nominated friend or family member arrives in the emirate on a tourist visa before October 31. Residents can claim up to three packages.

The perks remain valid until the end of the year. It is a referral scheme, essentially, of the kind a challenger bank might run to grow its deposit base, and it is being deployed by a destination that welcomed 19.59 million international overnight visitors in 2025, its third consecutive record year.

What actually happened to the numbers
Dubai hotels ran at 84.7% occupancy in February before the US and Israel struck Iran on February 28, and Iran began retaliating against American allies across the Gulf.

In the war’s first six weeks, more than 530 ballistic missiles, dozens of cruise missiles, and over 2,200 drones were directed at the UAE. Within 48 hours of the opening strikes, hotel booking cancellations across Dubai were running at 60%, and more than 80,000 short-term rental bookings went in the first week alone.

By mid-March, occupancy in Dubai had bottomed out at 19.6%. CoStar recorded 33.1% for the month as a whole, a fall of 54.4% year-on-year, with the Emirates-wide figure at 36.2%. The World Travel and Tourism Council put the cost to the wider Middle East at USD 600 million a day in lost visitor spending, roughly USD 180 million of it attributable to the UAE.

The damage did not stay in the hospitality accounts. Real estate transaction volumes fell 37% year-on-year during the first twelve days of March, and 49% against February, on Goldman Sachs figures.

A downgrade of nearly four percentage points by the institution with the best view of the domestic data is not a rounding adjustment. It is an admission that the disruption is not confined to a bad quarter in the hotel trade.

The same report pencils in a rebound to 9.8% in 2027, which tells you how the authorities are framing this. The loss is being treated as deferred rather than destroyed, a hole that fills in once the shooting stops.

Why the recovery is stuck in the middle
The first-half hotel data shows a market that has come off the floor without returning to anything like normal. UAE-wide occupancy fell nearly 28 percentage points year-on-year through June, with revenue per available room down 31.8%, on CBRE analysis of CoStar data.

Dubai took the worst of it, with occupancy down 24.6 points to 56.4% and RevPAR off 35.2%. Average daily rates slipped 7% to AED 701. After the Eid spike, June settled back into the high forties and low fifties.

Abu Dhabi saw occupancy fall only 13.5 points and RevPAR 20.3%, cushioned by domestic and regional demand, and a fixed events calendar. The split is instructive. Dubai’s model, built on long-haul arrivals and transit traffic, is the one most exposed to airspace closures, insurance exclusions, and nervous consumers eight time zones away.

Meanwhile, the quiet closures continue. Several landmark properties have shut for extended refurbishment, including Anantara World Islands and the Burj Al Arab, the latter for an estimated 18 months of capital work.

None has publicly linked the timing to the war. Taking rooms out of a market with no demand is sound asset management. It is also, unmistakably, a supply response to a demand shock.

The honest position
The UAE has the fiscal depth to absorb a bad year without distress, a diversified non-oil base that is still growing, and a genuine record of recovering from regional shocks with prices and volumes higher on the far side.

GlobalData expects UAE international arrivals to fall about 12% this year to 26.4 million before rebounding to 32.1 million in 2027. Dubai is targeting a return towards 19.6 million visitors, and betting heavily on the winter season and on projects such as the USD 3.9 billion Wynn resort at Al Marjan Island in 2027.

But a forecast is not an observation. Every recovery scenario now being briefed rests on de-escalation, and this week, that assumption looked thinner than it has since May. The memorandum has lapsed, the naval blockade is in force, Tehran says its posture has shifted from defensive to offensive, and missiles were fired towards the Emirates again.

The dichotomy, then, is not really between a struggling economy and an optimistic government. It is between a balance sheet that can wait and a business model that cannot. Sovereign wealth buys time. It does not buy a ceasefire, and it does not persuade a family in Manchester or Melbourne to book a beach holiday under a Level 3 advisory.

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The US national debt has crossed USD 40 trillion for the first time, underlining the scale of America’s fiscal challenge as investors demand higher returns to hold government bonds.

Treasury data showed that total public debt outstanding reached about USD 40.05 trillion on Tuesday (August 18), comprising roughly USD 32.3 trillion held by the public and USD 7.8 trillion in intragovernmental holdings. The milestone comes only months after the debt crossed USD 39 trillion in March.

The speed of the increase is striking. The debt was below USD 20 trillion in 2016 and has therefore more than doubled in roughly a decade. Pandemic spending was a major contributor, but persistent budget deficits, tax-and-spending imbalances, higher defense expenditure, and rising costs for Social Security and Medicare have continued to push borrowing higher.

The problem is becoming more acute because the world’s largest economy is not merely borrowing more; it is paying more to service what it already owes.

Net interest on publicly held federal debt reached USD 963 billion between October 2025 and July 2026, according to the Congressional Budget Office, equivalent to more than USD 3 billion a day.

Interest costs have become one of the largest items in the federal budget and are putting pressure on spending priorities.

The bond market is signaling that investors are increasingly conscious of the problem.

On August 13, the Treasury sold USD 25 billion of 30-year bonds at a yield of 5.22%, the highest borrowing cost for such debt since 2001. Longer-dated Treasury yields have remained elevated as investors assess inflation, government borrowing requirements, and geopolitical risks.

The rise in yields matters far beyond Washington. Treasury bonds underpin global financial markets and influence borrowing costs for mortgages, corporate debt, and other assets. If investors demand a higher return from the US government, companies and households can ultimately face higher financing costs as well.

The changing structure of government spending is also complicating the fiscal outlook. The United States is simultaneously dealing with high defense expenditure, substantial social-programme commitments, and increased interest costs, while the government continues to run large deficits.

ALSO READ | Trump’s war, tariffs squeeze American wallets

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Retail sales rose just 0.6% year on year in July, slowing from 1% in June and missing the 1.5% increase that economists had expected.

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The Ministry of Trade and Industry (MTI) lifted its forecast to 4.5%-5.5%, from its previous range of 2%-4%. It is the second upgrade this year, after the government initially forecast growth of 1%-3%.

The upgrade followed stronger-than-expected first-half performance. Singapore’s economy expanded 5.9% year on year in the second quarter, slightly ahead of the 5.7% advance estimate, taking the first-half growth to 6.1%.

Manufacturing was a major driver, expanding 12.5% in the second quarter, compared with 7.3% in the first. Growth was led by electronics and precision engineering as global demand for AI-related hardware remained strong.

Wholesale trade grew 8.3%, supported by higher sales of machinery and equipment, telecommunications products, computers, and electronic components. Finance and insurance expanded 6.2%, helped by stronger bank lending, fee income, and fund-management activity.

MTI said the global AI investment boom had been stronger than expected and was providing significant support to economies embedded in the global technology supply chain. Further increases in AI-related capital spending could provide additional momentum for Singapore during the rest of the year.

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The report argues that emerging economies have more to gain and less to fear from AI than advanced nations, urging policymakers to embrace the technology rather than risk missing another transformative industrial revolution.

“AI has thrown developing economies a lifeline, and they should seize it. They do not need large models or big data centers to reap its benefits. By adapting small, low-cost AI tools to local conditions, they can bring better medical care, education, judicial services and agricultural extension within reach of millions. But they must hurry: AI is spreading faster and is more context-specific than earlier general-purpose technologies like electricity and the internet. World Development Report 2026 shows how developing countries are responding—and succeeding,” said Indermit Gill, Senior Vice President and Chief Economist of the World Bank Group.

The World Bank said AI-powered applications could help health workers diagnose diseases more quickly, enable teachers to improve lesson planning, assist farmers with crop selection and weather forecasting, and expand access to public services in underserved communities.

For the 6.8 billion people living in low- and middle-income economies, AI solutions will need to be tailored to local realities, including voice-based services for people without smartphones or literacy skills. The report stressed that importing an AI model alone would not guarantee effective results without localisation and reliable local data.

ALSO READ | Energy shock bites: Iran war forces IMF to cut global growth outlook

Contrary to fears of widespread automation, the report found that only 4.5% of jobs in low- and middle-income countries face significant exposure to generative AI, compared with 14.2% in high-income economies. At the same time, around 16.2% of jobs in developing countries could see meaningful productivity gains, broadly comparable with the 18.7% expected in richer nations.

To unlock these benefits, the World Bank called for sustained investment in electricity generation and distribution, broadband connectivity, computing infrastructure, and digital skills, alongside wider access to smartphones and other digital devices.

“None of this is possible without first investing in the basics.” The report used these exact words to prove its point. It also used Sub-Saharan Africa as a good example; nearly one-third of rural schools still lack reliable electricity, and well over two-thirds have been deprived of dependable internet access.

“Closing this gap is already a priority — the World Bank Group is working with partners through Mission 300 to provide energy access to 300 million people across Sub-Saharan Africa by 2030, laying the foundation for broader digital and AI inclusion,” the study noted.

ALSO READ | AI, semiconductors and defence: Japan eyes supercharged economy by 2041

“Countries also need to expand access to computing power and improve the availability of local data, including in local languages, so AI tools can be tailored to serve their own people and economies. Governments should make it easier for new firms to attract investment, test ideas, and scale what works. Many AI pilots are already underway, but the bigger challenge is knowing which ones deliver results. Better evidence, stronger skills, and clearer procurement and evaluation frameworks will be essential,” the World Bank added further.

Building public trust is equally important. As AI evolves rapidly, the global body advised the governments to begin their policy responses by drawing on voluntary industry standards to encourage the technology’s responsible use, anchored in international cooperation to prevent regulatory fragmentation.

“When voluntary measures fall short, governments should apply existing laws to address the harms directly. Improved public services and better learning outcomes in schools will reinforce trust—but if AI embeds bias in government decisions or erodes data privacy, that trust will be difficult to recover,” the World Bank noted.

However, it cautioned that AI could also deepen inequality, spread misinformation, concentrate market power, and erode trust in public institutions if deployed without adequate safeguards for privacy, transparency, and accountability.

“The window to get this right is narrow. AI presents a once-in-a-lifetime opportunity to solve problems that have resisted solutions for generations. Developing countries that build the foundations now—power, connectivity, skills, and institutions—will be positioned to adopt and adapt AI for their people,” said Gaurav Nayyar, Director of the World Development Report 2026.

The report concluded by stating that timely adoption of AI could help lift growth, strengthen public services, and improve living standards across the developing world.

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On that day, workers finished dismantling the last sections of La Verja, the crossing between La Linea de la Concepcion in Spain and the British Overseas Territory of Gibraltar, after a treaty signed in Brussels marked the end of more than four years of tortuous post-Brexit negotiation between the UK, Spain, the European Union, and Gibraltar’s own government. It is being called, without much exaggeration, the fall of the last wall in continental Europe.

The symbolism is obvious. The economics are more interesting.

A border built for friction, now built for flow
Gibraltar is tiny, under seven square kilometres, home to roughly 38,000 people, but it punches wildly above its weight economically, built on financial services, online gaming and shipping, and boasting one of the highest per-capita incomes anywhere in the world. None of that would function without Spain.

Close to half of Gibraltar’s workforce, somewhere between 14,000 and 15,500 people, commutes across the border each morning from the surrounding Campo de Gibraltar region of Andalusia, one of the poorest corners of Spain, and commutes back again each evening.

For decades, that daily migration has taken place through a bottleneck: passport checks, customs inspections and, whenever relations between London and Madrid soured, deliberately extended queues that could turn a 10-minute crossing into a three-hour ordeal.

The new treaty removes that bottleneck entirely for land crossings. Instead of checks at the fence, Spain will now carry out Schengen border controls at Gibraltar’s airport and port on behalf of the EU, while Gibraltarian officials run a parallel, independent check of their own – an arrangement modelled on the juxtaposed controls already used at Eurostar terminals in London, Paris and St Pancras.

Crucially, and unusually, the EU’s new biometric Entry-Exit System, which has been generating long queues at airports across the bloc since it went live, will not apply at the land border itself. For the tens of thousands of people who walk or drive across every day, the crossing becomes, in effect, indistinguishable from moving between two ordinary EU neighbours.

That single design choice is likely to matter more to the regional economy than the headlines about sovereignty.

Border friction is a tax, and it has historically been a punishing one in the Campo de Gibraltar, a district with youth unemployment rates among the highest in Spain, where local livelihoods have long been hostage to the state of UK-Spain relations. Every hour lost in a queue is an hour not worked, not spent, not taxed.

Economists who study border regions consistently find that even modest delays act as a drag on cross-border investment, because uncertainty discourages the sort of long-term commitments – a lease, a mortgage, a hire – that make an economic zone function as one rather than two. Removing that uncertainty is, in the driest economic sense, a productivity gain handed to the region for free.

Money, workers and property
The immediate winners are easy to identify. Gibraltarian employers, particularly in financial services, online gaming and tourism-adjacent retail, gain more reliable access to the Spanish labour pool they already depend on; a firm that could previously lose staff-hours to a politically motivated go-slow at the frontier can now plan around a predictable commute.

Spanish workers, in turn, gain from wages that are considerably higher than those on offer locally in Cádiz province, without the friction that used to eat into the value of that wage differential. Property markets on both sides are likely to feel it too.

La Linea has long suffered from a peculiar economic geography: a town within walking distance of some of the highest wages in the region, yet unable to fully capture the spending and investment that proximity should generate, in part because the border itself deterred the kind of casual, everyday commercial exchange – lunch, shopping, services – that knits neighbouring towns together economically.

A frictionless crossing makes La Línea a far more attractive place to live for people working in Gibraltar but priced out of its notoriously expensive housing market, and a far more attractive place for Gibraltar-facing businesses to locate back-office functions that don’t need to sit inside the territory itself.

There is a broader trade dimension too, though it is worth being precise about its limits. Spanish officials have described the treaty as guaranteeing free movement of people and goods between Gibraltar and the surrounding area, and easier movement of goods would matter to a territory that imports almost everything it consumes.

But the deal is fundamentally a people-and-services arrangement, built around Schengen membership for border purposes rather than a full customs union; it resolves the border-crossing problem for workers and travellers far more comprehensively than it resolves questions of tariffs, product standards and regulatory alignment on goods, which will continue to be worked through under separate technical protocols.

Businesses trading physical goods into Gibraltar should expect the practical experience of moving people and services to improve dramatically, while the goods side of the ledger evolves more gradually.

What it means for the wider European economy
For Brussels and London, the Gibraltar deal matters less for its economic scale – the Rock’s economy, while formidable per capita, is a rounding error next to the EU’s – and more as a piece of unfinished Brexit business finally closed off.

Along with the Northern Ireland arrangements, Gibraltar was one of the last significant loose threads left over from Britain’s departure from the bloc, and its resolution removes a recurring source of diplomatic friction between London and Madrid that had periodically spilled into wider UK-EU relations.

European officials have framed the deal as a template of sorts: proof that pragmatic, functionally creative solutions can resolve even the thorniest legacy Brexit disputes without either side conceding on the underlying sovereignty question.

That is a useful precedent at a moment when the UK and EU are still negotiating the texture of their post-Brexit relationship on several other fronts, from youth mobility to regulatory alignment on food and agriculture.

There is also a signalling effect for investors. Gibraltar has spent the years since 2016 in a kind of suspended animation, its access to the EU single market for its dominant industries (online gambling, insurance, funds) steadily eroded, with firms hedging by opening EU-facing subsidiaries elsewhere.

Certainty about the border, even if it doesn’t fully restore market access, reduces one major variable in the calculation of whether to keep, expand or relocate operations on the Rock.

For a jurisdiction whose entire business model rests on regulatory stability and predictability, removing a recurring geopolitical risk factor is itself a form of economic stimulus.

Travel, tourism and the tension underneath
For travellers the change is straightforward and welcome. Day-trippers, cruise passengers connecting onward into Andalusia, and the steady flow of British tourists using Gibraltar as a gateway to southern Spain will no longer face the queues that made a visit to the Rock, at its worst, a logistical gamble.

Family visits and school trips between communities that are, in effect, one urban area artificially divided by a fence, become unremarkable again in a way they have not been for years.

But it would be wrong to read the fall of the fence as the disappearance of the border altogether. Gibraltar’s government has been candid that physical barriers are being replaced by digital ones: an expanded network of live facial recognition cameras, additional CCTV, a larger police presence and more resources for customs and coastguard agencies.

Chief Minister Fabian Picardo captured the trade-off neatly, describing the shift as swapping a physical fortress for a digital one.

That is a sensible security response to a genuinely more porous frontier, but it is also a reminder that ‘no more fence’ does not mean ‘no more border’; merely a border that has become invisible to most people crossing it in good faith, while remaining very visible to the systems tracking who is crossing.

Politically, the treaty resolves the practical border question without resolving the underlying dispute over sovereignty that has simmered since Spain lost the Rock at the Treaty of Utrecht in 1713.

Spanish nationalists have periodically viewed any softening of the frontier as a step toward reclaiming the territory outright, while Gibraltarians, who voted overwhelmingly to remain British in successive referendums, will be watching closely to ensure closer economic integration with Spain does not become a backdoor to a change in status they have consistently rejected.

None of that is likely to trouble the accountants at Gibraltar’s insurers and gaming firms, or the thousands of workers who will simply notice their commute is shorter this week than it was last week.

For a region whose economic history has been repeatedly interrupted by walls – built by dictators, reinforced by diplomatic spats, threatened by Brexit – the removal of the last one is, whatever the unresolved politics behind it, a straightforwardly good piece of economic news.

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The White House has been relentless in terms of persisting with Trump’s vision of a near-global tariff, despite the United States Supreme Court’s February 2026 verdict, that shot down the Republican’s “reciprocal” duties of 10% to 50%, that were imposed ‌under a national emergencies law to try to shrink Uncle Sam’s trade deficit.

The new tariffs, announced in a Federal Register notice, cover 99.4% of US imports. They also include numerous product exemptions, such as oil and gas, fertilizer, and certain food items.

“The United States has had a forced labor import ban for nearly a century and rigorously enforces it. It’s well past time for our trading partners to do the same. Today’s action will begin to correct what is both a human rights abuse and a distortive trade practice to improve the welfare of workers everywhere,” US Trade Representative Jamieson Greer said while announcing the tariffs.

Imposed under Section 301 of the Trade Act ⁠of 1974, the new duties allow the Trump administration to maintain a tariff floor on virtually all US imports despite the Supreme Court setback. Also, Section 301 has a prior history of surviving court challenges.

Argentina, Bangladesh, Britain, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, and Trinidad and Tobago will face a 10% tariff on their exports. The European Union, Taiwan, Japan, South Korea, and Switzerland have been assigned rates that, combined with pre-existing most-favored-nation (MFN) tariff rates, totaled 10% or 12.5%.

Vietnam, which issued a new decree this week to ban imports of goods made with forced labor, has been kept at the 12.5% slab. China, often accused by Washington of detaining Uyghur minorities in work camps, got featured in the same bracket too.

For the countries already having trade deals with Washington, the new forced labor duties would not push them above the caps decided under the bilateral arrangements.

However, the action has drawn stronger protests from trade partners like Australia and Brazil, who described the new tariffs as unjustified and said they would seek to have them removed, while Norway said there was “no basis” for them.

Canada, hit on Monday with new Trump tariffs on USD 20 billion worth of goods, saw its minister in charge of US trade, Dominic LeBlanc, commenting, “We will continue engaging constructively with the United States on this matter, as well as other outstanding issues, over the coming ⁠weeks to the mutual benefit of our citizens.”

However, the response from Prime Minister Mark Carney was a severe one, as he said, “Canada ‌will do whatever it takes to defend itself in a trade war with the United States, including possible retaliatory measures. We are intensifying our trade negotiations with the United States and will not hesitate ⁠to defend our interests if we have to.”

Carney, who was attending a meeting of provincial premiers after Washington’s new 50% tariff announcements, which would take effect on August 19, described the whole situation as an “unwarranted” one.

While Trump and Carney previously agreed to intensify bilateral trade talks, Washington’s latest tariff aggression, along with the White House’s non-commitment on extending the United States-Mexico-Canada Agreement (USMCA) for another 16 years, have complicated things now.

The US is negotiating with Canada and Mexico on separate tracks, and Washington has said it is making more progress with Mexico. As per the analysts, this statement also raises the risk of Uncle Sam possibly seeking to force concessions on Canada that Mexico agrees to.

Talking about the US-Mexico talks, officials from both nations will meet for a fourth round of negotiations to revamp ‌the North American trade pact in September, after talks this week exposed disagreements over changes to automotive content rules and other issues.

Greer met with Mexican President Claudia Sheinbaum and Economy Minister Marcelo Ebrard this week during a third round of talks over the USMCA. The officials discussed sectors like autos, economic security, labor, agriculture, and electronic payment services, as well as steel and aluminum products.

While the US and Mexico are neogtiating the six-year-old USMCA, which underpins nearly USD 1.6 trillion in regional trade that was once duty-free, if the negotiations spill into 2027, it will only result into a prolong business and investment uncertainty, something that both Mexico and Canada have been seeking to ease with Uncle Sam.

Washington has been demanding that vehicles contain 50% of US-made content to qualify for preferential market access into the world’s largest economy. The proposal, however, has been a non-starter for the Mexican government, with reports suggesting that the Latin American nation being unwilling to accept “even 1%” of American content, as ‌such a ⁠provision “opens the door for a potential increase in the future” and sets a “problematic precedent.”

“Under the current trade pact, vehicles must contain 75% North American content to qualify for duty-free treatment, with 40% produced by workers earning at least USD 16 per hour—a threshold met in the US and Canada. The agreement, however, does not require that a fixed share of content come from any one country,” sources told the Reuters.

Mexico also wants Washington to reduce “Section 232” national security tariffs of 25% on autos and 50% on steel and aluminum before making concessions on other issues. But Trump has shown no sign of easing the tariffs.

The auto tariffs have also put Mexican auto factories at a cost disadvantage to competitors in Japan, South Korea, and the European Union (EU), which face a 15% levy to export cars to the US with no regional content requirements.

The US has reportedly nudged Mexican officials to propose alternative ways to meet Trump’s goals ⁠of bringing more automotive production back to the American shores, displacing Asian components (read China) in the North American supply chain, and reducing Washington’s trade deficit with Mexico.

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Meanwhile, an entire generation of graduates is discovering that the jobs they were trained for were never advertised in the first place. This is the paradox defining the labour market in 2026, and it splits neatly into three acts.

The Boomerang
Through 2024 and 2025, corporate leaders stood on stage and told investors they were becoming “leaner” thanks to artificial intelligence (AI).

Behind the scenes, a different story was unfolding. Research from Forrester found that 55% of employers who made AI-driven layoffs now regret the decision, and separate surveys from Robert Half and Careerminds put the share of companies already rehiring for those exact roles at roughly 29% to 32%.

Gartner goes further, forecasting that half of all companies that cut customer service or operations staff in AI’s name will be forced to restaff those functions, often under new job titles, within the next year or two.

This is what analysts are calling the AI boomerang, where a role gets automated away, the automation falls short, and the company scrambles to rehire, usually at a cost.

Careerminds found that nearly a third of employers who rehired ended up spending more than they originally saved. Returning staff are also commanding higher wages, with some reports pointing to pay bumps of 20% to 35% above the original salary, because the new version of the job requires someone who can both do the work and supervise the AI doing it.

The reason is simple, even if executives were slow to grasp it. Generating output is not the same as exercising judgement. An AI model can draft a customer response or write a block of code in seconds.

It cannot always be trusted to decide whether that response is appropriate, or whether that code is safe to ship. Someone still has to review, route and approve the work, and that someone turned out to be expensive to lose.

Klarna is the case study everyone points to. The Swedish fintech built its AI assistant on OpenAI’s technology, claimed it could do the work of roughly 700 human agents, and cut close to 1,000 customer service jobs.

Within months, customer satisfaction had dropped sharply. Chief executive Sebastian Siemiatkowski later admitted the strategy had been too heavily skewed toward cost-cutting, and began rehiring human staff so customers could always reach a person if they wanted one.

Klarna only reached break-even in May 2026, a reminder that the savings from automation are not always as clean as the announcement suggested. Ford and Commonwealth Bank of Australia tell similar stories.

The quality problems and swelling call volumes forced both to bring experienced staff back, this time to train new hires and to fix what the AI could not.

None of this means generative AI is a failure. It means companies confused a tool for a workforce, and are now paying to correct the mistake.

The Silent Collapse
While experienced employees are being rehired, an entirely different and much quieter crisis is unfolding one rung down the ladder. Graduates are not being laid off. They are simply not being hired at all.

The numbers are stark. Entry-level hiring at the biggest tech employers fell by around 25% between 2023 and 2024.

A Stanford HAI study found that employment among software developers aged 22 to 25 has dropped almost 20% since its late-2022 peak, even as employment for developers over 30 kept growing.

Big Tech’s own data shows new graduates now make up around 7% of hires, down from roughly 32% before the pandemic. It is not that companies are firing juniors. They have simply stopped opening the door.

The mechanism is straightforward once you see it. Entry-level jobs have always been built around repetitive, well-defined tasks such as drafting boilerplate code, running first-pass research, handling routine queries.

These are precisely the tasks that large language models and AI agents now do fastest and cheapest. When a company decides it needs fewer hands on routine work, the junior role is usually the first one to disappear from the org chart, because it was built almost entirely out of the tasks AI now absorbs.

The human cost of this shift is easy to underestimate from a spreadsheet. A generation of students took on years of study, and often meaningful debt, in response to a decade of “learn to code” messaging from the very industry that is now telling them the entry point no longer exists.

Computer science graduates currently face unemployment rates close to double the national average. The traditional on-ramp into a corporate career, the place where a 22-year-old was once allowed to be slow, make mistakes and learn on the job, is narrowing fast.

The shift is also changing what employers increasingly mean when they advertise an “entry-level” role. Historically, those positions assumed candidates would arrive with theoretical knowledge and acquire practical experience over time.

Today, many employers expect applicants to already know how to work alongside AI systems, evaluate machine-generated output and navigate complex workflows with minimal supervision.

In effect, the definition of junior has shifted upward. Graduates are now competing for jobs that demand skills once associated with employees who already had a few years of experience.

This creates a difficult feedback loop. Companies argue they cannot find graduates with the right capabilities, while graduates struggle to gain those capabilities because the jobs where they would traditionally learn them have disappeared.

Universities can teach programming languages, marketing principles or financial analysis, but they cannot fully replicate the judgement that comes from solving real business problems, making mistakes and learning under experienced colleagues. Apprenticeship, whether formal or informal, has always been one of the hidden engines of economic productivity.

There is another consequence that receives far less attention. Innovation itself often depends on newcomers. Junior employees ask naive questions, challenge established assumptions and introduce ideas that veterans may overlook precisely because they have fewer preconceptions.

Organisations that become top-heavy risk losing not only a future leadership pipeline but also a valuable source of experimentation and fresh thinking. History shows that many breakthrough products and technologies emerged from teams that mixed experienced judgement with youthful curiosity.

The challenge, then, is not simply preserving jobs for the sake of employment statistics. It is preserving the ecosystem through which knowledge, responsibility and expertise are passed from one generation of workers to the next.

Without that transfer, businesses may discover that the skills they assumed could be bought later were never available to purchase at all.

The Coming Talent Drought
Bring the two threads together and a harder question appears. If companies automate away their junior employees today, where do their senior employees come from in five or ten years?

Experience is not something a model can generate. It has to be lived, mistake by mistake, on the job. Cut off that pipeline for long enough and there will be nobody left with the judgement that companies are currently paying a premium to rehire in Act One.

Some companies have already worked this out. IKEA’s parent company, Ingka Group, deployed an AI assistant called Billie that now handles 47% of customer inquiries.

Rather than cutting the 8,500 call-centre workers whose routine workload had disappeared, Ingka retrained them as remote interior design consultants. That new advisory channel now generates around 1.3 billion euro a year, turning what had been a cost centre into one of the company’s fastest-growing revenue lines.

IBM has taken a similar view. Its chief human resources officer, Nickle LaMoreaux, announced the company would triple its entry-level hiring in 2026, including for software development roles that AI is supposedly capable of doing.

IBM’s response was not to ignore automation but to rewrite what junior roles actually involve, shifting new hires toward client interaction, systems thinking and reviewing AI output rather than producing routine code from scratch.

The lesson from both examples is the same. The companies most likely to come through this transition intact are not the ones using AI to shrink their headcount.

They are the ones using AI to free up human capacity for the judgement, taste and accountability that no model can yet supply, and then investing that freed capacity in the next generation of talent rather than cutting it loose.

The AI boomerang shows what happens when companies mistake automation for elimination. The junior hiring freeze shows what happens when nobody notices the ladder has lost its bottom rung.

Left unaddressed, the two problems will meet in the middle of the next decade, when the experienced workers being rehired today retire, and there is no one left who was ever given the chance to replace them.

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United Kingdom has also taken up the co-chair’s role in the ‘Coalition to Grow Carbon Markets’, an 11-nation-backed initiative to boost corporate demand for high-integrity carbon credits, reduce policy fragmentation, and unlock billions in private climate finance for developing economies.

International Finance discussed with Dr Rich Stockdale, author of Rewilding Wealth (Rethink Press), the United Kingdom’s policy actions in accelerating the global decarbonisation efforts, by bringing carbon markets into play.

Armed with a PhD in data science, Dr. Stockdale combines a relentless commitment with visionary thinking to redefine humankind’s relationship with the natural world. He co-founded Oxygen Conservation with Oxygen House Group in 2021, and has rapidly built it into one of the world’s most impactful natural capital portfolios, valued at hundreds of millions of pounds, and actively transforming over 50,000 acres into thriving ecosystems for people and wildlife.

In this exclusive interview with the International Finance, Dr. Stockdale, a transformative leader and pioneering environmentalist on a mission to scale conservation, explains the workings of the UK’s VCM, its salient features, and how it will help the businesses transition as per the ‘Net Zero 2050’ goals.

Here are excerpts from the interview.

How does the UK’s Voluntary Carbon Market (VCM) work, especially the buying and retiring of carbon credits to offset emissions?
At its simplest, the voluntary carbon market allows organisations that restore or protect nature to generate independently verified carbon credits, which businesses can buy to compensate for their residual emissions as part of a credible net-zero strategy.

A carbon credit represents one tonne of carbon dioxide (or its equivalent) that has either been removed from the atmosphere, or prevented from being emitted. In the UK, credits are created through activities such as planting new native woodland or restoring degraded peatlands, both of which capture and store carbon over many decades.

Before any credits can be sold, the projects must be independently validated against the UK government-endorsed Woodland Carbon Code or Peatland Code by accredited bodies, such as Soil Association Certification. Once verified, the credits are issued and recorded on the UK Land Carbon Registry, a publicly accessible registry that provides transparency over ownership, transactions, and retirement, ensuring every credit can only ever be claimed once.

Businesses can then purchase these verified credits directly from project developers or through intermediaries. When a company wishes to use the climate benefit towards its own reporting or voluntary climate commitments, the credit is permanently retired from the registry. Retirement removes the credit from circulation, so it cannot be resold or double counted.

Unlike many voluntary carbon markets globally, UK woodland and peatland credits are backed by government-endorsed standards, independent verification, and a transparent public registry, giving buyers a high degree of confidence in the environmental integrity of the credits.

Our own first carbon sale illustrates how this works in practice. In 2025, we entered a partnership worth up to £1 million with Burges Salmon, which became the exclusive buyer of up to 8,000 premium UK carbon credits at £125 per tonne. Those credits are generated through native woodland creation and the restoration of ancient Atlantic rainforest at our Leighon Estate in Dartmoor, providing long-term finance for landscape-scale nature recovery.

How will the UK government’s six principles for voluntary carbon and nature markets make it easier and more credible for businesses to operate in the UK?
The six principles provide greater clarity about how voluntary carbon and nature markets should operate, giving both buyers and project developers greater confidence. Markets function best when expectations are clear, and these principles help establish a common framework for what constitutes high-integrity participation.

More broadly, the UK is positioning itself as the global market for high-integrity nature credits. While parts of the global voluntary carbon market have been characterised by inconsistent standards and declining trust, the UK is building its market around government-endorsed standards, transparent registries, and independent verification. That gives businesses greater confidence in the environmental integrity of the credits they purchase, and strengthens the UK’s position as a global leader in high-integrity nature markets.

What were the key industry suggestions made during the UK’s 2025 consultation on implementing these six principles?
Our response was submitted as part of a coalition of leading organisations from across the UK’s carbon and nature market ecosystem, representing project developers, investors, environmental finance specialists, technology providers, and land managers. Together, we focused on how the UK can build the world’s leading market for high-integrity carbon and nature credits.

We argued that government should move beyond setting principles, and create the policy foundations needed to attract long-term private investment into nature. That included enshrining the polluter-pays principle in law by requiring companies to develop science-based transition plans, and compensate for their residual emissions using high-integrity UK carbon credits, positioning the UK as a global leader in climate finance, and continuing to strengthen and promote domestic standards, such as the Woodland Carbon Code and Peatland Code. We also called for formal recognition of the Peatland Code alongside other carbon standards, and for high-integrity woodland and peatland credits to be integrated into the UK Emissions Trading Scheme.

Taken together, these measures would strengthen demand for UK credits, unlock private investment into large-scale nature restoration, and reinforce the UK’s position as the global leader in high-integrity environmental markets.

What is the role of the British Standards Institution in developing standards for engineered carbon removal and nature-based investments?
Standards bodies such as the British Standards Institution have an important role in establishing the rules and minimum standards that give markets confidence. As the market matures, however, we think the emphasis should shift from creating ever more layers of approval towards providing buyers with better information to assess risk.

Ultimately, that’s how the most successful financial markets operate. Investors don’t expect every asset to be certified as good or bad— they rely on transparent disclosure and independent risk assessments to make informed decisions. We believe carbon markets should evolve in the same direction.

Independent ratings providers, such as BeZero Carbon, are an important step in that evolution. Our Invergeldie woodland project, for example, received the UK’s first AA rating from BeZero Carbon, placing it amongst the highest-rated nature-based carbon projects globally. Combined with robust standards such as the Woodland Carbon Code and Peatland Code, that kind of transparent risk assessment gives buyers greater confidence and helps capital flow towards the highest-quality projects.

Could other countries adopt a similar Voluntary Carbon Market designation model to the London Stock Exchange?
Yes. We hope other countries will adopt similar models, but we also believe the UK has an opportunity to establish itself as the global centre for climate and nature finance.

What makes the UK distinctive isn’t any single initiative such as the London Stock Exchange’s Voluntary Carbon Market designation. It’s the ecosystem that is emerging around it: government-backed standards, transparent registries, independent verification and ratings, innovative financial products, and one of the world’s leading financial centres. Together, these create the foundations of a high-integrity market capable of attracting long-term institutional capital.

If the UK continues to innovate, the real export opportunity won’t simply be carbon credits. It will be the market architecture itself — the standards, financial products, regulatory frameworks, and intellectual property that enable private capital to flow into nature restoration around the world.

What makes the LSEG’s Voluntary Carbon Market designation unique for companies and investors?
The London Stock Exchange’s Voluntary Carbon Market designation is an important example of the market architecture the UK is building to attract private investment into nature. Its distinctive feature is that it allows companies to raise capital through public markets to finance the creation of future carbon credits, helping bridge the gap between the significant upfront cost of restoring nature, and the long-term revenues those projects generate.

More broadly, one of the biggest barriers to scaling nature restoration isn’t a shortage of projects — it’s a shortage of patient, long-term capital. That’s why innovations like the LSEG designation matter. They demonstrate how London’s financial ecosystem can develop new investment structures that connect institutional capital with high-integrity natural capital assets.

Ultimately, that’s the UK’s real opportunity. Success won’t be measured simply by the number of carbon credits traded, but by whether London becomes the world’s leading financial centre for financing climate and nature recovery.

How significant is Amazon’s expansion of its carbon credit services into the UK market for corporate decarbonisation?
It’s a significant signal that demand for high-integrity carbon credits is continuing to mature. Businesses increasingly want access to credible, independently verified carbon credits as part of their climate strategies, and platforms such as Amazon are making those markets more accessible by connecting buyers with trusted supply.

What’s particularly encouraging is that Amazon appears to be focusing on credit quality rather than simply favouring one type of carbon removal over another. The market is increasingly recognising that high-integrity nature-based removals, underpinned by robust standards, independent verification, and transparent monitoring, can play an important role alongside engineered removals. The debate is becoming less about technology and more about quality.

Ultimately, thriving markets need both supply and demand. Project developers create the high-quality environmental assets, while platforms and marketplaces help connect those assets with corporate buyers. The growth of that market infrastructure is another sign that voluntary carbon markets are becoming a more mature and investable asset class.

What role can the UK play through the ‘Coalition to Grow Carbon Markets’ in scaling high-integrity carbon markets globally?
Carbon markets are not the destination—they’re the financing mechanism. Their purpose is to mobilise private capital into restoring nature at a scale that governments and philanthropy cannot achieve alone.

The Coalition reflects an important recognition that high-integrity carbon markets will only scale if we create strong and sustained demand for high-quality credits. Project developers need confidence that there will be long-term buyers before they can invest in restoring landscapes at scale.

The UK is well placed to lead that effort. By combining robust standards, transparent market infrastructure, and clear policy signals, it can demonstrate how voluntary carbon markets can attract private investment while maintaining high environmental integrity. If successful, that model can be replicated internationally.

Our role is to help build the supply side of that market. Across our 50,000-acre portfolio, we’re restoring woodlands, peatlands, rivers, and other habitats to create high-quality carbon and biodiversity assets. Ultimately, success won’t be measured by the volume of credits traded, but by the amount of private capital mobilised into restoring nature.

How can governments and industry, through the ‘Coalition to Grow Carbon Markets’, address concerns around greenwashing and build trust in voluntary carbon markets?
Trust isn’t created through marketing — it’s created through transparency. The best way to address concerns about greenwashing is to build markets that deserve trust in the first place.

That means combining robust standards, independent verification, transparent registries, and increasingly, independent risk ratings that allow buyers to make informed decisions. Just as in financial markets, confidence comes from giving investors access to reliable information, not from asking them to accept broad claims at face value.

It’s also important that we communicate honestly about what carbon credits achieve. They are not a substitute for reducing emissions — they are a financing mechanism that enables private investment in restoring woodlands, peatlands, rivers, and other ecosystems while companies decarbonise. High-integrity nature-based projects deliver far more than carbon alone, generating benefits for biodiversity, water quality, flood resilience, and rural communities.

Ultimately, low-quality projects will continue to lose market share because buyers increasingly have the tools to distinguish quality from poor practice. That’s exactly how well-functioning markets should work.

The post UK positioning itself as global market for high-integrity nature credits: Dr Rich Stockdale appeared first on International Finance.

The approved plans for total spending of 555.4 billion euro will be financed partly through new borrowing worth 203.6 billion euro, including 118.7 billion euro for the core budget. The remaining will come through a 54.9 billion euro infrastructure fund and 30 billion euro from a special defence fund. The proposals will now go before parliament for approval.

Finance Minister Lars Klingbeil said the spending package was designed to strengthen Europe’s largest economy after years of weak growth and underinvestment.

“We want Germany to be a strong and crisis-resilient country. That is why the priorities in the 2027 budget are clear: We want to put our country back on a growth path and create the jobs of the ⁠future in Germany. We are investing in future viability and innovative strength, as well as in security and resilience,” he added further.

Defence remains the budget’s biggest priority. Core military spending will rise by a third to 109 billion euro in 2027, reaching 130.1 billion euro, including Ukraine support and other security expenditure. The government expects defence spending to increase from 2.8% of GDP next year to 3.5% by 2029, following reforms to Germany’s debt brake that allow greater military borrowing. Berlin will now commit a total of 783.8 billion euro to ⁠defence-related expenditure between 2026 and 2030.

Germany has earmarked 11.6 billion euro for Ukraine in 2027 and 8.5 billion euro annually from 2028 to 2030.

“We cannot defend Germany against Putin with a balanced-budget policy. We must make up, in the shortest possible time, for three decades in which no investment was made in our defence capability,” Klingbeil said.

The government also plans to invest 117.5 billion euro in 2027, supported by a 500 billion euro infrastructure fund aimed at modernising transport, energy and public assets.

However, the scale of borrowing has triggered concerns over Germany’s long-term finances. Interest payments are projected to almost double, from 41.9 billion euro in 2027 to 80.7 billion euro by 2030.

Business groups warned that rising debt could eventually squeeze public finances. The Federation of German Industries (BDI), along with German Mittelstand association DMB, while criticising the high borrowing level, sathe Germanost one in every five euros of tax revenue could be absorbed by interest payments by the end of the decade.

“By 2030, nearly one in five euros of tax revenue could be tied up in interest payments,” said BDI chief executive Tanja Goenner.

The budget has also drawn criticism from environmental organisations after the government proposed shifting money from a dedicated climate fund into the regular budget and reducing development aid spending. Klingbeil defended the changes, saying they were necessary to close a 34 billion euro budget gap without undermining Germany’s legally binding climate targets.

Beyond defence, the budget continues to allocate significant resources to welfare programmes and support for Ukraine, highlighting the balancing act facing Berlin as it seeks to revive growth while managing rising geopolitical and fiscal pressures.

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