US pauses £31 billion tech deal with UK  

The US has paused a promised investment of over £30bn into the UK tech sector over disagreements on trade policy.

The trade deal, which was announced in September when Donald Trump made a state visit to the UK, was lauded at the time by Prime Minister Keir Starmer, who described the deal as “a generational step change in our relationship with the US”.  

The pause was first reported by the New York Times, which claimed the breakdown in trade talks between the two countries stemmed from disagreements around a digital services tax on American tech companies and the UK’s food safety rules, which bar the import of certain agricultural products like chlorinated chicken from the US.

The US has reportedly pressured the UK Government to scrap or amend the digital services tax, a two per cent tax on the revenues of tech companies including US firms Amazon, Google and Apple. The tax raises around £800m a year for the UK economy, but president Trump has repeatedly threatened to retaliate against countries with digital taxes on US companies.

As part of the deal, US tech companies pledged to spend billions in the UK, including a £22bn investment from Microsoft and a £1.5bn investment from CoreWeave into DataVita, a Scottish data centre company.

Announcing the investment at the time, Danny Quinn, managing director at DataVita said: “This partnership is a landmark moment for the UK’s technology and sustainability goals. We are proud that our investment in green infrastructure has enabled a partnership with CoreWeave that will deliver the UK's most sustainable and powerful AI platform.”

Scotland is seen as an ideal place to host data centres, as the national grid generates more renewable electricity than it consumes, providing an abundant power source to run data centres. Scotland’s cold climate is also a draw, as the energy costs of cooling the vast servers that make AI possible are reduced.

There are currently 16 data centres in Scotland, with that number predicted to grow as the need for AI computing power increases. Data centres are a crucial component of AI systems, where they are used to train future versions of systems like OpenAI's ChatGPT and Elon Musk's Grok. 

Responding to the trade deal when it was announced, Nick Clegg, the former deputy prime minister, raised concerns that the UK could turn into a “vassal state” for tech companies based in the US, leaving the UK wholly dependent on US tech firms for investment and innovation.

Announcing the deal, Starmer said: “It’s our chance to ensure that technologies like AI, quantum and others amplify human potential, solve problems, cure diseases, make us richer and freer, strengthen democracy not tyranny.”