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.

Thousands of Cypriots have applied to join a new government scheme allowing overdue Social Insurance Fund contributions to be repaid in installments, with outstanding liabilities totaling €245 million.

According to Phileleftheros, around 1,500 applications were submitted between mid-May and July 21, while many more people have contacted the authorities for information about the programme.

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Third Debt Settlement Scheme

The repayment plan, which came into effect in May, gives debtors a third opportunity to settle overdue social insurance contributions after similar schemes introduced in 2016 and 2021.

It covers employers with debts accumulated up to February 2026 and self-employed workers with outstanding contributions up to the fourth quarter of 2025. Applications must be submitted electronically through the Ministry of Labour and Social Insurance.

Repayment Conditions

Approved applicants may repay their debts in up to 54 equal monthly installments. Depending on the repayment schedule, reductions in additional charges can reach 27%.

The minimum monthly payment is €25 for debts of up to €500, €50 for debts between €501 and €1,000, and €75 for debts above €1,000. Participants must also continue paying their current social insurance contributions on time to remain eligible for the scheme.

Missed Payments

Applications are reviewed by the relevant authorities, with successful applicants receiving written confirmation of the repayment schedule and monthly installment.

Installments must be paid by the final day of each month. If a payment is missed, debtors may either pay it together with the following installment or spread the outstanding amount across the remaining repayment period.

However, the arrangement is canceled if an installment remains unpaid for more than three months or if current social insurance contributions are not paid on time.

Suspension Of Legal Action

Debtors accepted into the scheme will not face additional surcharges while they remain compliant. Criminal proceedings will not be initiated, while any ongoing cases will be suspended.

Where courts have already approved enforcement measures, execution will also remain suspended for as long as the debtor complies with the repayment arrangement.

Bird Aviation has signed a long-term agreement with easyJet to provide scheduled aircraft maintenance services at its Larnaca facilities, expanding the companies’ existing partnership and securing maintenance work in Cyprus for at least seven years.

Seven-Year Maintenance Agreement

The agreement runs for an initial seven years, with an option to extend for a further three years, Bird Aviation said.

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Under the contract, the company will operate two maintenance lines dedicated to scheduled heavy maintenance checks for easyJet’s Airbus A320 family aircraft. All work will be carried out at Bird Aviation’s facilities in Larnaca.

Expanding An Existing Partnership

Bird Aviation said the agreement builds on its long-standing relationship with easyJet and provides a long-term framework for heavy maintenance services. The company added that the contract strengthens the role of its Larnaca base in supporting easyJet’s fleet maintenance programme.

EasyJet Reports Lower Profit

The agreement comes as easyJet faces a more challenging operating environment. The airline recently reported that pre-tax profit fell 70% to £85 million in the April-to-June quarter, compared with £286 million a year earlier, largely because of a £105 million increase in fuel costs following renewed conflict in the Middle East.

The airline also said customers are booking flights closer to departure, affecting the timing of revenue. However, booking trends have improved during the peak summer season, although easyJet said the outlook remains dependent on late-season demand and fuel prices.

Takeover Bid And Industry Challenges

EasyJet is also the subject of competing takeover bids from two U.S. investment firms. The board initially accepted a £5.5 billion offer from Castlelake before recommending Apollo Global Management’s higher £5.7 billion proposal. Any transaction could face scrutiny under European Union airline ownership rules.

Meanwhile, Ryanair also reported weaker earnings, with quarterly profit falling 34% to €538 million after higher jet fuel costs during the Iran conflict. Despite the higher costs, both airlines said demand strengthened during the summer travel season.

“Pricing has been attractive, driving strong late booking demand for our flights and holidays,” easyJet chief executive Kenton Jarvis said.

“Our recent experience is that bookings become strong in the month of departure,” he said. “So I expect that as we move through August, bookings will be above where they were at this time last year.”

Morgan Stanley has tempered its near-term optimism on humanoid robots, saying the industry’s biggest challenge may extend beyond technology to public acceptance, even as it maintains its forecast for Chinese shipments this year.

Morgan Stanley Takes A More Cautious View

Morgan Stanley has repeatedly raised its forecast for China’s humanoid robot shipments in 2026, increasing it from 14,000 units in January to 28,000 and later to 50,000. However, in a note published on Tuesday, the bank said large-scale adoption may depend not only on technological progress but also on how humanoid robots are perceived by the public.

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Public Acceptance Could Shape Adoption

The bank said humanoid robots are often presented as direct replacements for workers rather than as tools for hazardous, repetitive or labour-constrained tasks. According to the analysts, public acceptance could become as important as technical performance because the way robots are positioned may influence both policymakers and adoption by businesses.

Morgan Stanley also said investors, including the bank itself, may have underestimated the extent to which humanoid robots could complement rather than replace human workers. The analysts pointed to potential benefits including easing labour shortages, improving the economics of new manufacturing facilities and creating demand for maintenance, operations and other supporting roles.

Investors Shift Focus To Commercial Returns

The bank said investors are becoming less focused on demonstration videos and prototypes and are placing greater emphasis on measurable returns on investment. While commercial adoption is expanding, Morgan Stanley described it as both “early” and “narrow,” suggesting the next stage of growth will depend on proving productivity gains in real-world applications.

U.S. Restrictions Add Pressure

Morgan Stanley said geopolitical developments could also weigh on the sector. On Tuesday, the Trump administration banned imports of new Chinese humanoid and quadruped robots, citing national security concerns. According to the bank, the restrictions could increase research and development costs because low-cost Chinese humanoid robots are widely used in the United States for model development and testing.

Despite the additional challenges, Morgan Stanley maintained its forecast of 50,000 Chinese humanoid robot shipments by the end of 2026.

The final investment decision to develop the Kronos natural gas field in Block 6 of Cyprus’ exclusive economic zone could support future gas exports and the commercial development of additional discoveries, according to energy expert Charles Ellinas.

Kronos Moves Into Development

Ellinas said the decision by the Eni and TotalEnergies consortium marks an important milestone after years of delays. “This is certainly a historic development because, after 15 years, we are finally moving towards the process of exporting natural gas,” he said. Annual production from the Kronos field is expected to reach around five billion cubic metres, with about four billion cubic metres destined mainly for European markets. Even so, Ellinas said Cyprus’ exports would represent only a small share of Europe’s annual gas imports.

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Egypt Expected To Remain The Regional Hub

Ellinas said the project is unlikely to make Cyprus a regional gas hub, arguing that Egypt will continue to hold that position. He noted that both Cypriot and Israeli gas is transported to Egypt, with Israel expected to export around 20 billion cubic metres annually, roughly four to five times the volume expected from Cyprus.

Cyprus’ Financial Return May Be Limited

Ellinas said Cyprus could receive limited financial benefits from the project because of concessions agreed during negotiations. According to his estimates, the country’s overall benefit may not exceed 0.5% of GDP once production peaks in four to five years, while most revenues during the first three years will be used to recover the companies’ investment costs. “Unfortunately, Cyprus’ revenues from this project will be very low because, for it to proceed, Cyprus made significant financial concessions and accepted additional risks,” he said.

Zeus And Kalypso Could Follow

Ellinas said the development of Kronos could improve the commercial prospects of the Zeus and Kalypso discoveries. He argued that the government should seek to reserve Kalypso for Cyprus’ domestic gas needs, particularly as delays and rising costs at the Vasiliko import terminal make local production a more practical option. “If we want cheap natural gas, we need to bring in our own,” he said, adding that Kalypso could supply the domestic market after 2030.

Electricity Prices Unlikely To Ease Soon

Ellinas said electricity prices are unlikely to fall in the near term despite investment in renewable energy and storage. While storage can reduce wasted energy, he argued it will not lower prices unless electricity market rules are reformed so that the benefits of renewable generation are shared more broadly. “The law needs to change so that the benefits of renewable energy are shared more fairly,” he said.

Grid Upgrades Still Years Away

Ellinas said the planned electricity interconnection with Greece and Israel is unlikely to become operational before 2031. As a result, he believes meaningful reductions in electricity prices are unlikely before the end of the decade, with Cyprus needing to focus instead on upgrading its electricity grid, improving market operations and strengthening the resilience of its power system.

Cyprus’ average monthly earnings rose in the first quarter of 2026, according to provisional figures released on Wednesday by the Cyprus Statistical Service (Cystat). Distribution data published alongside the averages showed that most employees earned below the headline figure, reflecting differences across income groups, gender and nationality.

Average Pay Continues To Rise

Average gross monthly earnings for employees in Cyprus reached €2,601 in the first quarter of 2026, compared with €2,508 in the same period a year earlier, an annual increase of 3.7%.

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After seasonal adjustment, average gross monthly earnings stood at €2,652, up 0.8% from the fourth quarter of 2025. By comparison, the unadjusted average reached €2,932 in the previous quarter, reflecting year-end bonuses and other seasonal payments.

Most Employees Earn Below The Average

Distribution data showed that 40.9% of employees earned between €1,500 and €2,999 per month, making it the largest income group. A further 33.9% earned less than €1,500.

Only 13.1% of employees earned between €3,000 and €4,499, while 6.4% received between €4,500 and €5,999. At the upper end of the scale, 5.7% earned €6,000 or more.

Gender Gap Persists

Men continued to earn more than women on average. Male employees recorded gross monthly earnings of €2,776 in the first quarter, compared with €2,378 for female employees.

On an annual basis, men’s earnings increased by 3.3%, while women’s earnings rose by 4.2%. After seasonal adjustment, average monthly earnings reached €2,823 for men and €2,434 for women.

Compared with the previous quarter, seasonally adjusted earnings increased by 0.7% for men and 1.0% for women.

Earnings Vary By Nationality

The distribution of earnings also differed by nationality. Cypriot employees were more concentrated in the middle income bands, while non-Cypriot employees accounted for larger shares at both the lower and upper ends of the pay scale.

Among Cypriot employees, 45.2% earned between €1,500 and €2,999 per month, while 27.4% earned less than €1,500. Among non-Cypriot employees, 46.7% earned below €1,500, and 32.6% fell into the €1,500 to €2,999 bracket. At the highest income level, 8.5% of non-Cypriot employees earned €6,000 or more, compared with 4.3% of Cypriot employees.

The pattern was similar by gender. Among non-Cypriot men, 44.5% earned less than €1,500, while 10.3% earned at least €6,000. The corresponding figures for Cypriot men were 22.9% and 5.3%. Among women, 50.3% of non-Cypriot employees earned below €1,500, compared with 32.3% of Cypriot women. At the upper end of the scale, 5.5% of non-Cypriot women earned €6,000 or more, versus 3.1% of Cypriot women.

Earnings Distribution Highlights Differences Across The Workforce

While average monthly earnings increased in the first quarter, the distribution data showed that most employees earned below the overall average. The figures also pointed to differences in earnings across gender, nationality and income bands.

Mercedes-Benz reported stronger-than-expected second-quarter results, lifting its shares on Tuesday despite mounting pressure from Chinese automakers and a weaker outlook for sales and revenue.

The earnings provided a boost for Europe’s auto sector, where manufacturers continue to grapple with tariffs, softer demand and intensifying competition from Chinese rivals. Volkswagen, Mercedes-Benz and BMW have all accelerated restructuring efforts in response.

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Cost Discipline Lifts Quarterly Profit

Mercedes-Benz shares rose as much as 5.9% following the results before trimming gains to trade 3.5% higher by 1118 GMT. The company reaffirmed its profit margin guidance for its core passenger car business after reporting an adjusted return on sales of 4.0% for the second quarter, above market expectations and within its 3% to 5% target range.

“In an environment where some automakers are ringing alarm bells on their competitive positioning, Mercedes delivered a clear and confident message,” Morningstar analyst Rella Suskin said.

Second-quarter operating profit increased 22% to €1.5 billion ($1.7 billion), despite a 3% decline in revenue. Lower administrative and research and development costs, together with strong performances from the financial services and vans divisions, supported earnings, while the results also included a €131 million gain related to the planned sale of leasing subsidiary Athlon.

China Remains The Key Pressure Point

Despite stronger profitability, Mercedes continues to face a challenging market environment. Sales in China fell 30% during the second quarter, prompting the company to abandon earlier expectations for stable car sales and group revenue. It now expects both to decline slightly from a year earlier.

BMW also lowered its outlook in June following a deeper-than-expected slowdown in China, highlighting the pressure facing Germany’s premium carmakers. At the same time, Mercedes said Chinese manufacturers are increasingly expanding into European markets, although Chief Executive Ola Kaellenius said their focus remains on higher-volume segments rather than the premium market.

“But that is not a reason to sit back and be relaxed,” he said.

Manufacturing Shift Continues

Mercedes is also reshaping its manufacturing footprint. The company said its German factories will undergo a more aggressive push toward leaner production, although it declined to provide further details while talks with labour representatives continue. Production is also being expanded in lower-cost Eastern European locations, including Hungary, where the company is increasing capacity at its Kecskemet plant, as well as in Poland.

Chief Financial Officer Harald Wilhelm said the full-year margin for the passenger car division is expected to come in at the lower end of the company’s guidance range, reflecting a higher share of electric vehicle sales in Europe, which remain more expensive to produce and continue to weigh on profitability.

“We must continue to work flat out to reduce costs so that we can remain competitive on the prices of our products,” Kaellenius said.

Deposits and loans in Cyprus recorded strong net increases in June 2026, according to data released on Monday by the Central Bank of Cyprus. Deposit balances expanded at a faster pace than in May, while lending also increased despite a slight slowdown in annual loan growth.

Deposits Rise By €601.2 Million

Total deposits increased by a net €601.2 million in June, compared with a €343.8 million increase in May, bringing the overall deposit balance to €58.7 billion. The annual growth rate eased slightly to 5% from 5.1% a month earlier.

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Deposits held by Cyprus residents rose by €626.2 million. Household deposits increased by €49.7 million, while deposits from non-financial corporations climbed by €480.3 million. Deposits from other domestic sectors rose by a combined €96.2 million.

Loan Balances Also Expand

Total loans increased by €499.4 million in June, up from a net increase of €260.3 million in May. Outstanding loan balances reached €28.6 billion. Annual loan growth slowed to 11.6% from 12.6% in May.

Loans to Cyprus residents rose by €213.7 million, driven by a €131.4 million increase in household lending and a €90.1 million rise in loans to non-financial corporations. Lending to other domestic sectors declined by €7.8 million overall.

Key Takeaways

June’s figures showed stronger monthly growth in both deposits and loans compared with May, while annual deposit growth remained broadly stable and annual loan growth moderated slightly.

Deposits continued to be supported by households and businesses, with non-financial corporations accounting for the largest monthly increase. Lending also expanded across the household and corporate sectors despite the slower annual growth rate.

Electricity storage could play a key role in reducing power costs and improving the use of renewable energy in Cyprus, according to the Electricity Market Association.

In a statement, the association also expressed concern over delays in the issuance of Connection Terms by the Distribution System Operator, warning that bureaucratic procedures are discouraging multimillion-euro investments and ultimately driving up costs for consumers.

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Production Curtailments Are Undermining The System

“One of the most significant problems facing Cyprus’ electricity system today is production curtailment,” the association said.

According to the group, curtailments at large photovoltaic parks reached as high as 66% in April. It added that electricity lost from residential solar systems between January 1 and May 31 could have covered the annual consumption of around 7,500 households.

Curtailments occur when solar generation exceeds electricity demand or the grid’s capacity to absorb additional power, resulting in clean, low-cost energy being wasted.

Why Storage Matters For Consumers

Battery storage allows households and businesses to retain and use a larger share of the electricity they generate, reducing reliance on the grid and improving the return on their solar investment.

Beyond strengthening the electricity system, the association said, wider deployment of storage could also lower energy bills for consumers while helping the grid manage intermittent renewable generation more efficiently.

Regulatory Delays Are Slowing Investment

Despite growing demand for storage, progress in Cyprus remains slow because of lengthy administrative procedures, the association said. It argued that delays in issuing Connection Terms by the Distribution System Operator, which operates under the Cyprus Electricity Authority, raise concerns about the transparency and efficiency of the process.

According to the association, those delays discourage multimillion-euro investments, limit the use of lower-cost renewable electricity and preserve market distortions.

“Ultimately, they pass higher costs on to consumers,” the statement concluded.