Rolls-Royce raised its full-year profit and cash flow guidance after reporting stronger-than-expected first-half results, supported by growth across its civil aerospace, defense and power systems businesses.

Underlying operating profit rose 46% year on year to £2.5 billion ($3.3 billion) in the first six months of 2026, while revenue increased more than 24% to £11.3 billion.

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The company now expects full-year underlying operating profit of £4.7 billion to £4.9 billion, up from previous guidance of £4 billion to £4.2 billion. It also raised its free cash flow forecast to £3.8 billion to £4 billion, compared with £3.6 billion to £3.8 billion previously.

Shares rose as much as 6% in early trading before paring gains to trade about 4% higher.

Data Center Demand Supports Power Systems

Chief Financial Officer Helen McCabe told CNBC that orders in Rolls-Royce’s data center power business increased by more than 50% in the first half as operators invested in backup and on-site power systems.

The company has benefited from growing demand for power infrastructure as data center operators expand capacity.

Defense Spending Provides Additional Support

McCabe also said Rolls-Royce expects to benefit from higher defense spending in the U.K. and across NATO countries. She cited the U.K.’s long-term defense investment plan, which provides funding visibility through 2030 and beyond.

“We’ve had very positive initial conversations with the new government,” McCabe said, adding that the company supports its focus on growth, defense and industrial manufacturing.

Turnaround Continues

Chief Executive Tufan Erginbilgic said the company’s transformation strategy continued to deliver results. “Our transformation continues to deliver,” he said in a statement. “We have unlocked new growth opportunities across the Group.”

Inflation risks are increasing as energy prices remain elevated, but there is no evidence to justify an immediate interest rate increase, Central Bank of Cyprus Governor Christodoulos Patsalides said.

Speaking to financial news service Econostream, Patsalides supported the European Central Bank’s decision to leave interest rates unchanged, saying inflation remains broadly in line with expectations and second-round effects have yet to emerge.

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Energy Prices Remain Main Inflation Risk

“There was no evidence that would have supported a rate hike,” Patsalides said. “Second-round effects are not evident, expectations are anchored, and inflation is more or less in line with its expected path.” He said prolonged high oil prices remain the main risk to the inflation outlook if geopolitical tensions persist.

“As more time passes without a resolution of the situation, and prices remain elevated, being pre-emptive gains in importance,” he said.

Patsalides said the ECB will continue monitoring whether higher energy costs feed through to production costs, consumer prices, inflation expectations and wages. So far, he said, there is no evidence that inflationary pressures have broadened beyond energy, while wage demands remain contained.

ECB To Remain Data-Dependent

Patsalides said monetary policy decisions should continue to be based on incoming economic data rather than individual indicators. “One has to look at the whole set of data before assessing and deciding,” he said.

He also warned that larger fiscal deficits and higher defence spending across Europe could create additional inflationary pressures over the medium term.

No Return To Forward Guidance

Patsalides defended the ECB’s decision not to provide forward guidance, saying uncertainty remains too high to signal future policy moves.

“Honesty, flexibility and credibility” would be undermined if the central bank resumed forward guidance, he said. “One should not guide anyone toward a place that may not materialise, given the elevated uncertainty.”

He described the current level of interest rates as “neutral to restrictive” and said they remain “at the right level.”

Operational Framework Review

Asked about the ECB’s operational framework, Patsalides said discussions on minimum reserve requirements should form part of the broader review scheduled to begin in the autumn.

He added that this was not the right time to announce changes because heightened market volatility could create unnecessary confusion.

Bank of Cyprus has been named Cyprus’ Best Digital Bank at the Euromoney Awards for Excellence 2026, recognising the lender’s digital banking developments during the review period from January 1 to December 31, 2025.

Digital Banking Expansion

During the year, the bank integrated Fleksy, Cyprus’ first buy now, pay later service, into its digital banking platform. It also expanded Joey, its youth banking app, by adding savings and goal-setting features and enabling transfers between Joey accounts.

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Bank of Cyprus also extended QuickAccount to support sterling and US dollar accounts. In addition, it launched what it said was Cyprus’ first fully digital housing loan, expanding its digital offering beyond day-to-day banking services.

The bank said it now has more than 500,000 active digital users.

Focus On Customer Access

“Enabling our customers to access the financial products and services they need with ease at any time is at the core of our digital strategy,” Chief Digital Officer Demetris Nicolaou said. “It is an honour for the bank to be named the winner of Cyprus’ Best Digital Bank at the Euromoney Awards for Excellence 2026.”

The recognition follows the Euromoney Private Banking Awards 2026, where Bank of Cyprus retained its titles as Best Private Bank in Cyprus and Best for High-Net-Worth Individuals in Cyprus for a second consecutive year.

Wealth Management Growth

Euromoney also cited growth in advisory services, digital initiatives and a 36% increase in assets under management during the review period as factors supporting the bank’s private banking awards.

The 50 most expensive property transactions completed in Cyprus during the first half of 2026 reached a combined value of €286.4 million, according to data compiled by Ask Wire. The figures show that premium land and strategically located assets continued to attract the largest investments.

Limassol Dominates High-End Transactions

Six of the country’s ten largest property deals were completed in Limassol, with a combined value of €117.2 million. The biggest transaction involved the sale of fields with a building in Moni for €55 million.

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Paphos accounted for three of the top ten deals worth a combined €35.5 million, while Larnaca recorded one transaction valued at €9 million.

Land Leads Investment Activity

Limassol also ranked first among the 50 largest transactions overall, with its ten biggest deals totaling €148.2 million, or 51.7% of the combined value.

Paphos followed with €68.8 million, representing 24% of the total. Nicosia recorded €26.7 million, while the free area of Famagusta and Larnaca accounted for €21.4 million and €21.2 million, respectively.

Ask Wire Chief Executive Pavlos Loizou said seven of the ten largest transactions involved fields or development land. He said these were likely prime sites for residential or hotel projects and noted that demand for office space has also increased as more companies establish operations in Cyprus.

First Quarter Accounted For Most Major Deals

Loizou said eight of the ten largest transactions in the first half of the year were completed during the first quarter. He attributed the slower pace in the second quarter to uncertainty stemming from the conflict in the Middle East, which he said affected investment decisions.

Meta Platforms’ Reality Labs division reported an operating loss of $4.62 billion in the second quarter, highlighting the continued cost of the company’s investments in virtual and augmented reality technologies. The unit generated revenue of $431 million, up from $370 million a year earlier and above analysts’ expectations of $423.4 million, according to StreetAccount. Operating losses widened from $4.53 billion in the same quarter of 2025.

Revenue Grows As Losses Continue

Despite higher revenue, Reality Labs remains one of Meta’s biggest cost centres. Since late 2020, the division has accumulated more than $80 billion in operating losses as the company continues investing in hardware and software for its long-term computing strategy.

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Focus Shifts Toward AI Wearables

Reality Labs develops the Quest virtual reality headsets and Ray-Ban Meta smart glasses in partnership with EssilorLuxottica. While Meta originally positioned the division around its metaverse vision, the company has increasingly focused on AI-powered wearables as demand for virtual reality devices has grown more slowly than expected.

Long-Term Investment

Meta renamed Facebook to Meta in 2021 to reflect its strategy of expanding beyond social media through immersive technologies. Although Reality Labs continues to report multi-billion-dollar quarterly losses, Zuckerberg has maintained that investments in AI, wearable devices and next-generation computing platforms are central to the company’s long-term growth strategy.

Meta Bets On Personal AI Agents As Next Consumer Platform

Meta CEO Mark Zuckerberg said he expects personal AI agents to become a mainstream technology within the next five years, describing them as software that understands users’ goals and performs tasks on their behalf. Speaking during the company’s quarterly earnings call on Wednesday, Zuckerberg said it would be “extremely unlikely” that billions of people will not have their own AI agent capable of operating continuously across a range of personal and professional activities.

Beyond Chatbots

Zuckerberg said personal AI agents would go beyond answering questions by helping users manage finances, monitor health, navigate relationships and organize household responsibilities. He argued that future AI systems will increasingly carry out tasks rather than simply respond to prompts. “As we move toward a future where we’re all interacting with multiple agents, I think that WhatsApp and our other messaging surfaces are going to become increasingly important,” he said, adding that WhatsApp is already the leading platform for Meta AI interactions.

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Competition Intensifies

Meta is among several technology companies investing heavily in AI agents. Google has made custom AI agents a central part of its search strategy, while Anthropic has expanded Claude’s capabilities through its coding assistant, Claude Code. The competition reflects a broader industry push toward AI systems designed to perform tasks autonomously rather than function solely as conversational assistants.

AI Investment Weighs On Results

Meta’s AI ambitions continue to require significant investment. Reality Labs, the company’s augmented and virtual reality division, reported a quarterly operating loss of about $4.6 billion, bringing cumulative losses since 2021 to roughly $88 billion. Free cash flow declined to $784 million from $8.55 billion a year earlier, reflecting increased spending on AI infrastructure. Earlier this week, Meta and BlackRock also announced plans to develop a $14 billion data centre in El Paso, Texas.

Betting On Long-Term Returns

Despite the investment, Zuckerberg said Meta expects AI services to generate stronger margins than providing computing capacity alone. “We believe that there will continue to be a significantly higher margin on selling intelligence rather than selling compute directly,” he said. “But we think that there’s a big opportunity, obviously, to sell compute as well.” He added that personal AI agents would form “the foundation for our next wave of products and revenue lines in the months and years ahead.”

Enterprise Adoption

Meta said more than one million businesses are already using its business AI agents on WhatsApp and Messenger following their global rollout this quarter. The company is now seeking broader consumer adoption as it expands its AI offerings, positioning personal AI agents as a key driver of future products and revenue.

Cyprus has widened its support for research and innovation with an expanded version of the Restart 2016–2020 programmes, adding fresh funding capacity and a new cybersecurity-focused initiative designed to accelerate the commercialisation of innovative products and services.

Expanded Scheme Approved Under Existing State Aid Framework

State Aid Control Commissioner Stella Michaelidou has approved amendments to the measure titled “Restart 2016–2020 Programmes for Research, Technological Development and Innovation of the Research and Innovation Foundation”, allowing the continuation of the scheme under revised terms. The programme had already been deemed compatible with state aid rules under Decision No. 471, issued on July 18, 2025.

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The updated framework reflects both a broader scope and a modest increase in the approved budget, underscoring Cyprus’ continuing effort to strengthen its innovation ecosystem and improve the country’s capacity to support applied research and new technology development.

New Cybersecurity Programme Targets Fast-Track Innovation

The most notable addition is the Fast Track Innovation (FTI) programme, which will support the rapid development of innovative products and services in the cybersecurity sector. The initiative is aimed at established businesses across all sectors that are investing in the fast delivery of internationally competitive solutions.

In practical terms, the new programme gives Cyprus a more targeted tool for backing high-potential innovation where speed to market can be decisive, particularly in a field such as cybersecurity, where demand is rising, and competitive advantage often depends on rapid execution.

Budget Increases To €308.4 Million

According to the Office of the State Aid Control Commissioner, the scheme’s approved budget has been increased from €306.9 million to €308.4 million. The expansion follows the earlier approval under Decision No. 471 and reflects the widening of the programme’s scope.

The revised measure also includes updated standard cost scales for staff remuneration and extends the deadline for funding decisions under the scheme to June 30, 2027.

Broad Eligibility Across The Innovation Ecosystem

The Restart scheme remains open to a wide range of beneficiaries, including research organisations, higher education institutions, scientific and professional bodies, businesses, business associations, non-governmental organisations, public services and public utility organisations.

Individuals such as academics, scientists, researchers, technical personnel, students and pupils may also take part in relevant programmes supported under the measure, broadening the pipeline of participation across Cyprus’ research and innovation landscape.

Strategic Push For Innovation Capacity

The State Aid Control Commissioner’s office said the measure was approved following a decision by the Board of Directors of the Research and Innovation Foundation and the issuance of the relevant state aid decision. Decision No. 488 was published in the Official Gazette of the Republic on July 10, 2026, and has also been made available on the commissioner’s website.

The revised Restart programme comes as Cyprus continues to invest in research, technological development and innovation as core drivers of long-term competitiveness. By increasing support for businesses, researchers and institutions developing new products, services and technologies, the government is signalling that innovation remains a strategic economic priority.

Cyprus Tourism Slows As Occupancy And Arrivals Fall Below Last Year’s Levels

Cyprus’ tourism sector is facing a weaker summer season than last year, with hotel occupancy, visitor arrivals and overnight stays all trending below 2025 levels despite improving bookings in recent weeks.

The softer outlook comes as Paphos Municipality and the Cyprus Hoteliers Association (Pasyxe) reaffirmed their commitment to closer cooperation on tourism development and service quality during a meeting at Paphos Town Hall.

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Acting Mayor Angelos Onisiforou and newly elected Pasyxe President Yiannos Pantazis said they would continue working together to strengthen Paphos’ tourism offering and address challenges facing the sector.

Occupancy Remains Below Last Year

Pasyxe Director General Christos Angelides said hotel occupancy is averaging about 85% during July and August, around 10% to 15% below last year’s levels. Although bookings have improved in recent weeks, uncertainty continues to affect demand for the autumn season, he said.

Angelides attributed the weaker performance to higher energy costs, expensive air travel and regional instability, adding that the industry is focusing on extending the tourism season beyond the summer months.

“Our biggest hope is to build on last year’s performance during the November 2026 to April 2027 period. That is where we believe the difference can be made,” he said.

Travel Industry Reports Softer Demand

Association of Cyprus Travel and Tourist Agents (ACTTA) President Haris Papacharalambous also said tourism activity remains below last year’s levels, although the decline has been moderate.

He said the Famagusta district has been more heavily affected than other regions and pointed to regional instability as one of the main factors influencing demand. Israel was the only major source market to record significant growth, with arrivals rising sharply from June 2025 after travel had been disrupted by the Israel-Iran conflict.

Papacharalambous said overnight stays are expected to finish 2026 around 12% to 14% below last year’s record level.

Arrivals Continue To Decline

Official figures from the Cyprus Statistical Service (Cystat) show tourist arrivals fell 1.7% year on year in June to 489,965.

During the first six months of 2026, arrivals declined by 10.1% to 1.66 million, down from 1.84 million in the same period of 2025.

The United Kingdom remained Cyprus’ largest source market in June, accounting for 33% of arrivals, followed by Israel with 16.4% and Poland with 7.3%. Holiday travel represented 81.6% of total arrivals.

Paphos Gains International Recognition

Despite the weaker market conditions, Paphos recently received international recognition after being named the world’s top destination for sunrise and sunset views in a ranking by photo-printing company Cewe.

The ranking, produced in partnership with travel photographer Bella Falk and featured by Travel + Leisure, highlighted locations including Petra tou Romiou, Paphos Castle and the Edro III shipwreck.

Nasos Hadjigeorgiou, executive director of the Paphos Regional Tourism Board, said the recognition would strengthen the city’s profile in international markets while supporting efforts to promote tourism beyond the traditional summer season.

Cyprus has cleared a €6 million artificial intelligence initiative aimed at helping businesses, public sector bodies and researchers access advanced AI infrastructure after the project received approval under European Union state aid rules.

State Aid Approval

State Aid Control Commissioner Stella Michaelidou ruled on July 17 that the funding scheme for the Cyprus AI Factory Antenna Pharos-CY complies with EU state aid rules, clearing the way for its implementation.

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The programme will be managed by the Deputy Ministry of Research, Innovation and Digital Policy.

Support For Businesses And Researchers

Small and medium-sized enterprises will be the main beneficiaries of the programme. Large companies, semi-government organisations and government departments may also receive support under EU de minimis rules or through measures that do not constitute state aid.

Pharos-CY aims to support the development and adoption of artificial intelligence applications in areas including healthcare, sustainability, culture and language.

Access To AI Infrastructure

Working with Greece’s AI Factory Pharos and the EuroHPC Joint Undertaking, the initiative will provide start-ups, SMEs, public sector organisations and researchers with access to AI tools, curated datasets and high-performance computing resources, including the Daedalus supercomputer.

The programme will also offer advisory services, secure data environments and specialised AI tools tailored to Cyprus’ priorities.

€6 Million Budget

The project has a budget of €6 million, with €3 million funded by the Deputy Ministry of Research, Innovation and Digital Policy and the remaining €3 million provided through Horizon Europe.

The programme will run until March 31, 2029. It was approved by the Council of Ministers in June 2025 and will take effect once the agreement between the Deputy Ministry and AI Factory Antenna Pharos-CY is signed.

Michaelidou said the scheme is compatible with Regulation (EU) No. 651/2014, specifically Article 28 governing innovation aid for SMEs.

Cyprus’ economic growth is expected to slow in 2026 while inflation accelerates, according to updated forecasts from the Economics Research Centre of the University of Cyprus (CypERC), which cited weaker momentum and higher uncertainty linked to the conflict in the Middle East.

Growth Forecast Revised Lower

CypERC expects real GDP growth to slow to 2.7% in 2026 from an estimated 3.8% in 2025 before recovering to 3.1% in 2027.

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The 2026 forecast was revised down by 0.2 percentage points from the centre’s April projections, while the 2027 estimate was unchanged.

According to CypERC, the downgrade reflects weaker economic activity during the first quarter of 2026 in Cyprus and the euro area, together with signals from leading indicators between April and June. The centre said the conflict in the Middle East has contributed to weaker regional and international economic conditions.

Inflation Expected To Accelerate

The research centre forecasts inflation will rise from 0.1% in 2025 to 3% in 2026 before easing to 2.1% in 2027.

The 2026 and 2027 inflation forecasts were both revised up by 0.3 percentage points from April. CypERC attributed the higher projections mainly to rising international oil prices in April and May, as well as stronger domestic inflation during the second quarter.

“The continuing tensions in the Middle East have intensified upward pressure on international commodity prices, particularly oil, and have increased uncertainty regarding the outlook for economic growth and inflation,” the centre said.

Domestic Fundamentals Remain Supportive

Despite the weaker outlook, CypERC said low unemployment, strong public finances and higher new housing lending should continue to support economic activity.

However, the centre warned that weaker external demand, stronger inflationary pressures and tighter financing conditions could weigh further on growth.

“As the effects of the conflict continue to spread through the Cypriot economy, leading to weaker external demand, stronger inflationary pressures and tighter financing conditions, the risks are tilted towards even lower economic growth than forecast, as well as even higher or more persistent inflation,” the report said.