US puts 31bn tech prosperity deal' with Britain on ice

"The US has paused its promised multi-billion-pound investment into British tech over trade disagreements, marking a serious setback in US-UK relations. The 31bn tech prosperity deal, hailed by Keir Starmer as a generational stepchange in our relationship with the US when it was announced during Donald Trump's state visit, has been put on ice by Washington. As part of the deal, US tech companies pledged to spend billions in the UK, including a 22bn investment from Microsoft and 5bn from Google."

"But Washington has paused the implementation of the agreement, citing a lack of progress from the UK in lowering trade barriers in other areas. British officials sought to downplay the development, which was first reported by the New York Times. The newspaper said Trump's administration was unhappy about the UK continuing to levy a digital services tax on American tech companies and its food safety rules, which bar the export of certain agricultural products."

"One British government source said it was the usual bit of hardball negotiations by the Americans and said that the deal to allow tariff-free British pharmaceutical exports to the US was on and off before it was finalised. [The US commerce secretary] Howard Lutnick is a tough guy. We understand that the Americans negotiate incredibly hard but we'll stand our ground. They want what's best for their country, we want what's best for ours, the source said."

Washington has paused the 31bn tech prosperity deal that included pledged investments such as 22bn from Microsoft and 5bn from Google. The pause reflects US concerns about lack of UK progress on lowering trade barriers, specifically the UK's digital services tax and food safety rules restricting certain agricultural exports. British officials described the move as hard-nosed negotiation and said tariff-free pharmaceutical export arrangements were on and off before finalisation. The deal would have created an AI growth zone in north-east England with potential to bring up to 30bn and 5,000 jobs. The agreement only becomes operative alongside substantive progress on formalising and implementing its terms.

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