The US has halted its pledged multi-billion-pound investment in British technology due to trade disputes, representing a significant blow to US-UK relations.

The £31bn “tech prosperity deal,” described by Keir Starmer as “a generational transformation in our ties with the US” at its announcement during Donald Trump’s state visit, has been postponed by Washington.

As part of the agreement, US technology firms committed to invest billions in the UK, featuring a £22bn investment from Microsoft and £5bn from Google.

However, Washington has halted the enactment of the deal, pointing to insufficient advancements from the UK in reducing trade restrictions in other sectors.

British officials aimed to minimize the significance of the development, initially reported by the New York Times. The newspaper reported that Trump's administration was displeased with the UK's decision to maintain a digital services tax on U.S. tech firms and its food safety regulations, which prohibit the export of specific agricultural goods.

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A British government source indicated that it was “the typical tough negotiations by the Americans” and noted that the agreement permitting tariff-free British pharmaceutical exports to the US fluctuated before being finalized.

“[The US commerce secretary] Howard Lutnick is a strong character.” We recognize that Americans are tough negotiators, but we will maintain our position. “They desire what is ideal for their nation, we desire what is ideal for ours,” the source stated.

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A second government official stated that the advancement was “aspect of the negotiations” with Washington.

The prosperity agreement featured the establishment of an artificial intelligence “growth zone” in the north-east of England, which UK officials indicated could generate as much as £30bn and create 5,000 jobs.

 

However, the wording of the agreement indicated that it only “takes effect when significant advancements are achieved to formalize and apply” it.

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The choice to suspend it is a setback for the UK government, which promoted the deal as a reward for its year-long efforts with the US to prevent punitive tariffs on British goods. In September, as a component of his diplomatic charm offensive, Starmer welcomed Trump for a second state visit at Windsor Castle, an exceptional privilege for a US president.