Donald Trump has dramatically put a flagship UK–US technology deal on ice, in a stinging rebuke to Labour and Keir Starmer’s bungled attempts to cosy up to Washington.
The much-vaunted “tech prosperity deal” was trumpeted during Mr Trump’s state visit to Britain in September, with Labour hailing it as proof they could rebuild relations with the White House. Ministers boasted it would unlock £31billion of investment from Silicon Valley giants.
Instead, the deal is now in deep freeze.
The White House has confirmed it has paused work on the agreement (which covered artificial intelligence, nuclear power and quantum computing) after growing frustration at the UK’s sluggish progress under Labour. The move, first revealed by the New York Times, comes as US officials push for better trade terms and lose patience with Britain’s lack of delivery.
The tech deal was dependent on progress on a separate “economic prosperity deal” struck in May, aimed at boosting trade in cars, beef and pharmaceuticals. But MPs have condemned Labour’s handling of the talks as “haphazard”, with insiders saying US officials are fed up with Britain dragging its feet.
There is particular irritation in Washington over Labour’s refusal to ease safety rules that would allow more American products into the UK – a key demand of the Trump administration.
Adding to the tensions, White House figures are said to be furious about Britain’s online safety laws and the digital services tax, which mainly hits US tech firms. Despite American pressure, the Treasury recently confirmed the tax would stay, another blow to relations.
Despite the setback, a government spokesman insisted everything was fine, claiming the “special relationship” remained strong and that Labour was committed to making the deal work for “hardworking people”. Critics say it is empty spin masking a serious diplomatic failure.
When the deal was first signed, Sir Keir breathlessly claimed it represented a “generational step-change” in relations with the US. Just months later, it has unravelled on his watch.
Business Secretary Peter Kyle and Technology and Science Secretary Liz Kendall travelled to the US last week in a last-ditch charm offensive, holding talks with officials and tech bosses. But it remains unclear whether their efforts have reassured American partners.
There are now growing fears that Labour’s mismanagement could put major US investment at risk. Microsoft has pledged £22billion for Britain, including data centres and an AI supercomputer, while Nvidia, Google and OpenAI have also promised big spending.
The tech deal was announced alongside nuclear agreements too, including plans by British Gas owner Centrica and US firm X-Energy to build small nuclear reactors in the UK, projects that could now face uncertainty.
For critics, the message from Washington is clear: under Labour, Britain is failing to deliver… and the US is losing patience.
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