👩‍⚖️ Europe's regulating AI

What’s going on here?

After working – read: arguing – until the early hours, European lawmakers agreed on a handful of provisional AI regulatory rules.

What does this mean?

Despite what the name would have you believe, the “AI Act” isn’t a student production depicting a rogue robot masquerading as a human. Instead, it’s a broad set of rules designed by the European Union to regulate AI. Under the proposed plan, developers like OpenAI would need to record their training methods, log all copyrighted material used, and add disclaimers to any AI-generated content that reaches the real world. Crucially, any systems powerful enough to pose a risk to society at large would be held to strict industry guidelines, and would have to report any unsavory occurrences to the European Commission. Policymakers are hoping to receive the approval stamp before the European elections in June, a bid to avoid the delay that inevitably comes with a reshuffle of parliament. If that happens, the act will mark the first set of formal AI rules to grace the Western world.

Why should I care?

For markets: Let’s get up to speed.

AI developers kicked into high gear this year, determined to keep up with ChatGPT-creator OpenAI. So not only are policymakers playing catch up, but they also have to tread a difficult line: safeguarding the technology’s downside without stifling its potential upside. It doesn’t help that the digital realm tends to be a divisive and perplexing topic in the traditional mahogany walls of government.

Zooming out: The not-so-golden rules.

Regulation could be the difference between a utopia free of ailments and back-breaking work, and a dystopia fraught with misinformation, more powerful wrongdoers, and automated attacks. But for AI companies, it’s a downer. Just look at C3.ai: the California-based company blamed potential customer firms’ increasingly stringent precautions for its worse-than-expected revenue last quarter and deepening losses for the year as a whole.

What’s going on here?

British houses got pricier for the second month in a row.

What does this mean?

Tight budgets and steep mortgage rates – a result of higher interest rates – mean most Brits have been too focused on stretching their paychecks to even think about buying a house. Hopeful sellers, then, have been pulling down their asking prices to attract any lingering buyers. But if you were holding out for a steal, you might’ve missed your chance. House prices ticked up by 0.5% in November from the month before, after getting 1.2% more expensive in October. Combine that with Bank of England (BoE) figures that showed more mortgages were approved in October than either of the two months before, and the housing market seems set for a revival.

Why should I care?

Zooming in: Honey, I shrank the housing market.

Investors thought British house prices could fall as much as 10% this year – and yet, Halifax plotted them at just 3.5% below last year’s peak. In fact, at £283,615 ($356,590) in November, the average home was £44,000 ($55,314) pricier than in pre-pandemic January 2020. But that’s not because buyers were chomping at the bit. More likely, it’s down to a shortage of houses, forcing hopeful homebuyers to bid more to beat their competition. That wasn’t helped by a steadier-than-expected job market, which meant only a few homeowners had to sell to free up cash, capping the number of properties for sale.

The bigger picture: This could all just blow over.

The BoE’s interest rates seem to have worn down inflation, so some investors think the central bank could cut rates and ease the pressure on the economy as soon as mid-next year. That would bring mortgage rates down a peg, making it cheaper to own a house and enticing more buyers into the market. And when that happens, sellers and agents could whack some more digits on their asking prices again.