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AI Spending Spree: Tech Giants Face Cashflow Risk

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Tax Threshold Freeze and Royal Mail Under Scrutiny as Economic and Business News Dominate

LONDON - Several significant developments are impacting businesses and consumers, including concerns over tax policies, postal service delays, and the financial impact of artificial intelligence investments. The UK government's freeze on tax thresholds, which will remain in place until 2031, is expected to affect take-home pay for many workers, while Royal Mail faces scrutiny over allegations of prioritizing parcel deliveries over letters. Simultaneously, major tech companies are increasing capital expenditure on AI, raising concerns about potential negative cash flow.

The freeze on tax thresholds, announced in the Autumn Budget, means that individuals could pay more tax as their salaries increase. According to BBC Business, wages have been rising faster than prices for the last two-and-a-half years, but frozen thresholds could offset these gains. A tax calculator is available on the BBC website to help individuals assess the impact on their pay. This policy applies to employees in England, Wales, and Northern Ireland.

Royal Mail has been given two weeks to respond to allegations that it is prioritizing parcel deliveries over letters, leading to delays across its postal network. The Business and Trade Committee of MPs has requested commitments to improve the situation, describing it as "chaos," according to BBC Business. The BBC reported that hundreds of people contacted them to claim parcels were being prioritized while letters were being stored for batch delivery. Royal Mail stated it would respond in detail to the MPs and acknowledged the frustration of delayed mail.

In the tech sector, significant capital expenditure on artificial intelligence (AI) is raising concerns. According to analysts at Evercore ISI, the spending on AI by major tech companies has become so large that it risks making some companies cash-flow negative. Meta is expected to spend $55 billion on AI capex this year, Alphabet is planning to double its capex to $180 billion, and Amazon has guided a 50% increase to $200 billion, according to Evercore. This has led to volatility in the S&P 500, as investors react to both positive earnings reports and speculation about AI's impact on businesses, according to Fortune.

In other news, retailers are offering discounts for Presidents Day, with deals available on various gadgets, including earbuds, speakers, and smart home tech, according to The Verge.

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Synthesized from multiple sources. Reviewed for accuracy.

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