European Central Bank President Christine Lagarde will resign in February, nine months before her term ends, as the eurozone searches for its next monetary policy chief.
The Federal Reserve left its benchmark interest rate unchanged this week, pointing to continued US economic growth despite earlier concerns about a slowdown. Policymakers signaled a cautious, data-dependent approach to any further moves.
Italy’s government has approved a new budget combining tax reductions, household support and defence spending with higher contributions from banks and energy companies. With public debt approaching 140 per cent of GDP, Rome faces difficult decisions over the cost of its political and economic commitments.
Italian Prime Minister Giorgia Meloni’s government approved a €26 billion budget package on Wednesday, 28 October, seeking to ease pressure on households and businesses while maintaining the fiscal credibility of one of Europe’s most heavily indebted economies.
The measures, agreed by the cabinet ahead of next year’s general election, include changes to personal income taxation, support for younger workers and families, and the extension of existing relief programmes.
The government intends to finance part of the package through additional contributions from banks, insurance companies and energy businesses.
However, the budget also exposes the limits of Italy’s financial flexibility as Rome attempts to accommodate higher defence expenditure and energy-security requirements within the European Union’s fiscal framework.
The immediate political challenge is to demonstrate that tax reductions and spending commitments can coexist with efforts to contain public debt.
Banks and energy companies face additional demands
According to Reuters’ report on the cabinet decision, Meloni confirmed that approximately €5 billion would come from banks and insurance companies, while energy companies would contribute a further €700 million.
The measures form an important part of the government’s funding strategy.
Italy’s banking sector has benefited from the period of higher European interest rates, although profitability varies between institutions and has been affected by changing monetary conditions.
The government argues that companies with relatively stronger financial positions should contribute more during a period of economic difficulty.
Meloni said the budget was not directed against any particular sector, while acknowledging that an agreement with financial institutions had not been reached before its adoption.
The financial package also includes an increase in Italy’s financial transaction tax, commonly referred to as the Tobin tax.
Such measures provide the Treasury with additional resources without requiring broad increases in personal income taxation.
Nevertheless, their implications extend beyond immediate revenue collection.
Additional taxation of financial institutions can influence investment decisions, lending conditions and the sector’s willingness to finance domestic economic activity.
The extent of those effects will depend on the final provisions adopted by parliament.
Tax reductions target households and younger workers
A central element of the budget concerns Italy’s personal income tax system.
Meloni announced that the upper threshold of the second income-tax bracket would rise to €55,000 a year, extending preferential treatment to a wider group of taxpayers.
The government estimates that some taxpayers could save approximately €500 annually.
The package also includes employment-related incentives directed towards younger workers, alongside measures to support households and pensioners.
Another politically significant decision concerns vehicle taxation.
Meloni confirmed that an exemption for cars with engines rated up to 80 kilowatts and for motorcycles would become permanent.
According to the government’s estimates, approximately 70 per cent of vehicles currently in use would qualify.
These measures are intended to protect disposable income and encourage economic activity.
However, their overall economic impact will depend on the distribution of benefits, consumer confidence and whether households choose to spend or save the additional income.
Public debt remains the central constraint
Italy’s budget cannot be assessed independently of its debt position.
According to the Bank of Italy’s October economic bulletin, the government expects its public deficit to reach 2.9 per cent of GDP in 2026 before increasing to 3.4 per cent in 2027.
Public debt is projected to reach approximately 138.5 per cent of GDP next year.
Those figures leave Italy particularly exposed to changes in borrowing costs.
Higher yields on government bonds increase the cost of refinancing debt and reduce the resources available for other priorities.
The economic environment offers limited assistance.
Although those figures predate the latest budget, they illustrate the underlying weakness of economic expansion.
Without stronger productivity growth and investment, reducing Italy’s debt burden remains difficult even when the government exercises spending restraint.
Defence spending complicates European fiscal rules
The increase in Italy’s projected deficit is partly connected to the use of flexibility available under the EU’s fiscal governance framework.
Rome has invoked the national escape clause to accommodate additional expenditure associated with defence and energy security.
This mechanism allows certain temporary deviations from agreed spending paths under specified conditions.
It does not, however, eliminate the government’s obligation to manage its finances or establish unlimited borrowing capacity.
Italy’s approach reflects a wider European problem.
Governments are being asked to strengthen military capabilities, protect energy supplies and maintain economic competitiveness while continuing to comply with fiscal constraints.
For highly indebted countries, the combination is particularly difficult.
The consequences could become more pronounced if financial markets demand higher returns on government debt.
Parliament faces the final decision
Cabinet approval marks the beginning of the budget’s final legislative phase rather than the completion of the process.
Parliament must consider the measures before they can enter into force.
Negotiations may still alter individual tax provisions, spending commitments and the distribution of financial contributions.
The budget also comes at a politically sensitive moment, with Meloni’s governing coalition approaching the next general election.
Its partners have previously disagreed over taxation, pensions and the appropriate distribution of public resources.
The final legislation will therefore provide an indication of the coalition’s ability to reconcile electoral priorities with economic constraints.
For Brussels, the question is whether Italy can preserve confidence in its public finances while using European fiscal flexibility to fund additional security expenditure.
For Rome, it is whether the immediate relief promised to households and businesses can be maintained without placing further pressure on borrowing costs.
Both questions will remain central to Italy’s economic outlook in 2027.
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Singapore's core inflation eased to 2 percent in September. Headline inflation also slipped to 2.2 percent from 2.3 percent in August, pointing to cooling price pressures in the city-state.
This week's cyber freakout explained: AI is making software weaknesses easier to find and exploit.
The message from Cloudflare's Stephanie Cohen and Vercel's Tom Occhino: Don't panic!!!
Do we need everything connected to the internet? Paper bank statements work well.
A few weeks ago, I heard a strange story about a friend who works at one of the Big Tech companies in Silicon Valley.
She'd recently ripped out the connected devices in her home, ordered paper bank statements, and stocked up on canned goods in her basement.
Now, she's a very sane, experienced person, and quite senior at one of the largest internet companies on earth. Why was she disconnecting so much? Just to be sure, my family ordered paper bank statements, too. It was still a head-scratcher, though.
Fast forward to this week, and her actions look a little less crazy.
The digerati have now entered full freakout mode. Much of the internet meltdown is happening on, well, the internet, my colleague Alice Tecotzky noted.
On X and Reddit, warnings of a looming “Black October” spiraled into visions of AI grinding civilization to a halt. One lengthy post on X warned of a potential “global cyberattack/AI swarm” and offered a survival checklist: Stockpile cash in small bills, print out your neighbors' phone numbers, download maps, buy a hand-crank radio, and stash a gallon of water per person per day.
Oh, and don't forget the manual can opener. You don't want to survive the AI apocalypse only to be defeated by a tin of beans.
Nikita Bier, a prominent app developer and former head of product at X, best captured the mood.
"The world is a little bit scary right now," she told me on the side of Cloudflare's annual conference in San Francisco this week.
Here's the problem. The internet is built on decades of software, much of it riddled with security holes.
Some of these weaknesses have been known for years. However, fixing them takes time and money, and hackers often lacked the skills to exploit them anyway. So they were left alone.
AI changesthat calculation dramatically. Someone who previously needed years of training to break into a computer system can now get help from an AI model. And these tools can search for weaknesses at a speed humans simply can't match.
Now, there's a frantic race between people trying to break into systems and those trying to protect them.
Don't panic about AI
Cohen's message, though, was surprisingly reassuring.
AI helps the good guys find and fix these problems. Cloudflare, for instance, released protections for the latest vulnerability to customers, including those using its free service.
And there's a bigger effort underway.
OpenAI has launched an initiative called Patch the Planet, working with Cloudflare and other security professionals to use AI to find weaknesses in widely used software and help repair them.
Tom Occhino, chief product officer at Vercel, told me recently that his company has been talking with partners about launching a nonprofit that would fund a swarm of good AI agents that go out on the internet to find and fix software flaws.
Amazon is joining the fight, too. Its new Continuum service, available Thursday, uses AI agents to find security holes and propose fixes. Amazon said that people maintaining freely available software can use it to help protect the wider internet.
Humans may still have to check and approve these repairs, but the prospect of AI helping clean up decades of neglected software is encouraging.
The irony of this is not lost on some in the industry.
"The funny thing is everyone was saying AI slop code will cause a cyber crisis but it's actually all the old human slop causing it and the AI is just cleaning it up," software engineer Ben Kaufman wrote on X on Thursday.
Either way, Cloudflare's Cohen thinks these AI-inspired freakouts will push the industry to do better — by exposing issues and adding urgency to get them patched.
"We may end up in a world where actually we've become significantly more secure at the end," she said.
The trouble is getting there.
A fundamental question about the internet
Tom Occhino (left), chief product officer at Vercel, talks with Meta executive Prashant Ratanchandani at Vercel's Ship SF conference.
Alistair Barr/Business Insider
When I ran into Occhino recently at a Vercel conference in San Francisco, he described a world in which software that everyone assumed was safe suddenly looksvulnerable because increasingly capable AI models are scrutinizing the basic systems that underpin the internet.
That led to a more fundamental discussion between us: Why did we connect so many things to the internet in the first place?
For years, the technology industry has raced to put everything online. Thermostats. Refrigerators. Doorbells. Cars. Bank accounts.
We assumed that connecting something to the internet automatically made it better.
Perhaps we should reconsider.
Before the internet
I remember the world before the internet. It worked pretty well. We managed to buy groceries, pay bills, heat our homes, and generally get through the day without every appliance talking to a computer somewhere.
That doesn't mean abandoning online banking or throwing your smartphone into the sea.
Occhino, for one, isn't particularly worried about hackers wiping out his bank account. Modern banks have sophisticated protections, and he recommends everyone turn on additional login security.
Maybe the cybersecurity crowd, which spends its life immersed in online threats, is missing something obvious.
Not everything needs to be connected.
Occhino put it neatly: "There's certain things that don't make sense to be on the internet in the first place."
Perhaps that's the lesson from this week's panic. We don't need to turn off the internet.
U.S. Treasury yields posted their sharpest one-day drop since the 2023 banking crisis as investors rushed into government bonds amid a broader tech-stock sell-off. Analysts described the move as a flight to safety rather than a signal of imminent recession.
The central bank lifted its policy rate sharply as the country reels from war-fuelled price rises and faces further risk from an approaching 'super' El Nino.
Initial filings for US unemployment insurance slipped to a seasonally adjusted 194,000, among the lowest readings since the 1960s. The data points to a continuing trend of low layoffs across the American labor market.
New Zealand's annual inflation rate tumbled to 3.7 percent. The slowdown has raised the odds that the Reserve Bank will lift its benchmark interest rate at next week's policy meeting, even as price pressures are forecast to pick up again soon.
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