The United States has paused its £31bn tech investment deal with the UK amid ongoing trade disputes, marking a significant setback in bilateral relations. The “tech prosperity deal,” announced during Donald Trump’s state visit and hailed by Keir Starmer as transformative, included pledges from US companies such as Microsoft (£22bn) and Google (£5bn) to invest in the UK.
Washington cited limited UK progress on trade barriers as the reason for the hold, particularly regarding the digital services tax on US tech firms and food safety regulations restricting certain agricultural exports.
British officials described the pause as part of tough US negotiations, with the agreement’s text stipulating it would only take effect alongside “substantive progress” in formalising its terms.
The deal had promised an AI growth zone in northeast England, projected to generate £30bn and 5,000 jobs. Starmer previously resisted US pressure to amend the 2% digital services tax, which raises roughly £800m annually, and has maintained UK food standards despite US objections.
UK trade secretary Peter Kyle recently met US officials to discuss tariffs, AI collaboration, and critical minerals, with talks set to continue in January. A government spokesperson said the UK remains committed to delivering opportunities through the tech prosperity deal, despite the current pause.
