The tech prosperity deal is huge. But will the UK reap the benefits?
- Written by Richard Whittle, University Fellow in AI and Human Decision Making, University of Salford
The much-lauded UK-US tech deal landed to coincide with President Donald Trump’s state visit to the UK. It has been dubbed the “tech prosperity deal”, but who, exactly, is set to prosper? After all, the deal will make the UK more reliant on US tech and may hasten the embedding of US artificial intelligence (AI) throughout the UK economy.
Having said all that, it is a significant investment by a variety of US firms in the UK. Headline announcements include a £10 billion commitment[1] from private equity firm Blackstone supporting an AI growth zone in the north-east of England; Palantir to invest up to £1.5 billion[2] to help make the UK a defence innovation leader, a £22 billion[3] commitment from Microsoft (with half of this for capital expenditure for AI and cloud services); and an £11 billion[4] injection into the UK economy from chip maker Nvidia.
Further announcements include CoreWeave (a data centre company) investing £1.5 billion[5] in UK data centre sites[6], software firm Salesforce investing £1.4 billion[7] in the UK; Google’s parent company Alphabet investing £5 billion[8] in AI; and further investment from Nvidia in UK AI startups.
A record-breaking £150 billion[9] of investment has been announced in total. All of this is also expected to bring forward billions of pounds of investment into nuclear energy to power this tech explosion.
Read more: Can the UK fast-track nuclear power without cutting corners on safety?[10]
It’s impressive stuff – investment at the size and scale to make a difference. It is clear that the UK government sees AI as a way to bring jobs, productivity and economic growth[11]. From the government’s perspective, AI is a panacea[12] for the UK’s economic woes.
This deal signals confidence in the UK’s tech sector. Nvidia’s CEO Jensen Huang has predicted that the country will become an “AI superpower”[13], noting that the UK has the expertise and research facilities to excel. But he added that what is currently missing from the UK is the infrastructure. This deal could build that[14].
It could be that the puzzle pieces are slotting into place. The UK’s world-leading research and expertise, long hamstrung by the lack of infrastructure[15] is finally getting the boost it needs. AI is boom and bust[16] in nature, but these long-term strategic investments should outlast an AI hype cycle.
However, a thriving AI tech sector does not automatically translate to Prime Minister Keir Starmer’s promise[17] to put more money in people’s pockets and spread the economic and employment benefits across the UK. Even those high up in the industry concede that capturing the upside of the AI boom is not guaranteed[18].
Many of the announcements are of investment that the AI firms need to make[19]. They could invest in other countries – these firms need data centres and are building them globally – and so capturing the investment for the UK is an achievement. There is a sense that Trump’s state visit has allowed the firms to garner US political capital by promising UK investment at the same time.
The UK’s technology secretary Liz Kendall has said the deal did not include guarantees on scrapping a tax for big tech[20] or on copyright for AI companies. But on the other hand, is this the same as guaranteeing the tax won’t be scrapped or watered down?
The Trump administration has argued[21] that the UK’s new Online Safety Act (which obliges tech companies to protect users from harmful content) and its digital services tax erode free speech rights and unfairly target American tech giants.
And the UK’s former deputy prime minister Nick Clegg, also a former executive at Facebook parent company Meta, has argued that the deal will simply make the UK more reliant on US technology. The UK, he has argued, will be “defanged”[22] as it is not building its own AI capacity.
Indeed, these considerable investments show US companies harnessing the latent potential (and ownership) of UK artificial intelligence. For example the announcements also include Huang’s £500 million[23] equity stake in NScale – a UK cloud computing company – which he predicts will have revenues of up to £50 billion[24] over the next six years.
Of course those who invest and take the risk should get their returns. But if AI is seen as the technology to revitalise the UK economy, and if the prime minister’s AI Opportunities Action Plan talks of sovereign AI, should this investment not come from the UK itself?
The same could be said for much of the capital investment that has been announced. Data centres may have significant environmental costs[26] – certainly questions are being asked about their water usage[27] and burden on the grid[28].
US ownership of these facilities could leave the UK dealing with the negatives and not receiving maximum benefits from the returns. And will they create long-term employment for the regions that may suffer the impacts? The evidence is mixed. Data centres certainly create jobs[29] in their construction (some are very large indeed and they are generally getting bigger). But once they are operational they need far fewer staff.
The US-UK tech deal may take the UK a step closer to achieving its tech ambitions. But even if it does become an AI superpower, the country will need to do more if it really wants to feel the widespread benefits.
References
- ^ £10 billion commitment (www.bbc.co.uk)
- ^ £1.5 billion (observer.co.uk)
- ^ £22 billion (www.bbc.co.uk)
- ^ £11 billion (www.itpro.com)
- ^ £1.5 billion (www.businesswire.com)
- ^ UK data centre sites (theconversation.com)
- ^ £1.4 billion (www.techpolicy.press)
- ^ £5 billion (www.bbc.co.uk)
- ^ A record-breaking £150 billion (www.gov.uk)
- ^ Can the UK fast-track nuclear power without cutting corners on safety? (theconversation.com)
- ^ bring jobs, productivity and economic growth (www.gov.uk)
- ^ AI is a panacea (www.publictechnology.net)
- ^ “AI superpower” (www.theguardian.com)
- ^ build that (www.bbc.co.uk)
- ^ lack of infrastructure (theconversation.com)
- ^ boom and bust (www.theguardian.com)
- ^ Keir Starmer’s promise (www.thinkdigitalpartners.com)
- ^ not guaranteed (www.bbc.co.uk)
- ^ need to make (www.goldmansachs.com)
- ^ a tax for big tech (www.bbc.co.uk)
- ^ has argued (fortune.com)
- ^ will be “defanged” (www.theguardian.com)
- ^ £500 million (www.theguardian.com)
- ^ up to £50 billion (www.theguardian.com)
- ^ EPA/CHRIS J. RATCLIFFE / POOL (epaimages.com)
- ^ environmental costs (www.theguardian.com)
- ^ water usage (www.theguardian.com)
- ^ burden on the grid (www.reuters.com)
- ^ create jobs (www.wsj.com)
