POLITICO Tech Podcast Summary Episode: The U.S. and UK will broker a tech deal. Here’s what to watch.
Release Date: February 28, 2025
Host: Stephen Overlee

Introduction

In this episode of POLITICO Tech, host Stephen Overlee delves into the pivotal meeting between U.S. President Donald Trump and UK Prime Minister Keir Starmer. While the ongoing war in Ukraine was expected to dominate discussions, the UK presented significant tech ambitions aimed at forging a new economic partnership centered on advanced technologies. POLITICO's Deputy Tech and Trade Editor in London, Joseph Bambridge, joins the conversation to unpack the complexities and potential implications of this emerging tech deal.

Meeting Highlights: Balancing Conflict and Collaboration

Stephen Overlee opens the discussion by setting the scene for the Thursday meeting between Trump and Starmer. Despite the overshadowing conflict in Ukraine, the UK Prime Minister emphasized technological collaboration:

Keir Starmer (00:57): "Instead of overregulating these new technologies, we're seizing the opportunities that they offer. So we've decided today to go further, to begin work on a new economic deal with advanced technology at its core."

Starmer reiterated the historical collaboration between the U.S. and the UK in shaping technological innovations and expressed optimism for their partnership in leading 21st-century advancements:

Keir Starmer (01:31): "Look, our two nations together shaped the great technological innovations of the last century. We have a chance now to do the same for the 21st century."

Proposed Tech Deal: Ambitions and Objectives

Joseph Bambridge provides an in-depth analysis of the UK's tech priorities heading into the meeting:

Joseph Bambridge (02:20): "The UK wants to partner with US tech firms for large scale compute investments... making the UK kind of the first overseas destination for US tech firms looking to build and partner."

The proposed economic arrangement seeks to position the UK as a premier destination for American tech investments, particularly in sectors like artificial intelligence (AI), quantum computing, and life sciences. This strategy aligns with the UK's recent initiatives to bolster its own tech infrastructure and innovation capabilities.

UK’s Long-Term Tech Ambitions

Bambridge highlights the UK's strategic plans to become a leader in AI and related technologies:

Joseph Bambridge (04:28): "The UK came out with its AI Opportunities Action Plan, which was a kind of 50-point plan to make the UK an AI leader... building up the UK's sovereign capacity."

The plan emphasizes enhancing the UK's computational infrastructure and fostering an environment where the nation becomes an AI creator rather than merely a consumer, relying heavily on partnerships with U.S. tech giants to secure substantial investments.

Navigating Cooperation and Competition

The delicate balance between collaboration and competition surfaces as Bambridge discusses potential tensions:

Joseph Bambridge (06:03): "Trump wants investment in the U.S., trying to build out AI infrastructure... while the UK aims to attract its own investments."

While the UK seeks to attract U.S. investments to expand its tech sector, Trump's administration focuses on reshoring technological investments within the United States. However, Bambridge notes that the scale of investment sought by the UK is significantly smaller, potentially mitigating direct competition:

Joseph Bambridge (06:42): "The UK will never kind of be on the scale that the US will be aiming for... but there are plenty of other pitfalls, particularly around regulation and taxes."

Regulatory Challenges and Digital Services Tax

A significant hurdle in the negotiations revolves around digital regulations and the UK's Digital Services Tax (DST):

Joseph Bambridge (08:02): "The UK's Online Safety Act, its digital markets regime, its digital services taxes... these are areas that, you know, if they took Trump's attention, he probably wouldn't like."

The DST, which imposes taxes on global tech companies, is a contentious issue. Reflecting on the negotiations, Bambridge anticipates that the UK might consider reducing or withdrawing its DST to facilitate better terms with the U.S.:

Joseph Bambridge (10:44): "The UK might think it can give some ground... if OpenAI commits to invest £1 billion in the UK, you might take that trade-off."

However, this move carries political risks, including potential backlash from European allies who may view the UK as the first to capitulate under U.S. pressure.

Elon Musk’s Influence: A Complicating Factor

Elon Musk emerges as a significant, albeit challenging, influence on the UK's tech landscape and its negotiations with the U.S.:

Joseph Bambridge (12:48): "Elon Musk is a complicating figure... he can throw the government's media plan off track, as we saw when he helped promote a child grooming scandal."

Musk's outspoken nature and substantial influence on social media platforms like X (formerly Twitter) can derail the UK's strategic messaging and focus, posing additional challenges for Prime Minister Starmer in maintaining a coherent negotiation strategy.

Future Outlook: Assessing the Deal’s Substance

As the episode concludes, Bambridge reflects on the tangible outcomes of the meeting and what to monitor moving forward:

Joseph Bambridge (15:02): "The big question is how much of substance there is and whether this is actually just a strategy to demonstrate to Trump that the UK wants to be a partner... Whether a new agreement really moves the dial on investment, I think is an open question."

Key areas to watch include the future of Ukraine, potential U.S. tariffs on global tech, and early indicators of whether the U.S. and UK can establish a productive and mutually beneficial tech partnership.

Conclusion

This episode of POLITICO Tech provides a comprehensive overview of the evolving U.S.-UK tech relationship amidst geopolitical tensions and shifting regulatory landscapes. With strategic ambitions on both sides, the coming months will be critical in determining whether this nascent tech deal will foster significant advancements or falter under competing national interests and influential external pressures.

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