Technology prosperity: the powerplay for international trade, growth and transformation

The Technology Prosperity Deal is one that has flown surprisingly under the radar given some of the big tech brands involved, the timing of the announcement amid an official UK state visit and the connected trade negotiations. Yet, the scale of the agreement holds significant interests and consequences for C-suite executives with UK interests and the organisations they’re looking to expand – or is it simply a new way of two G7 superpowers to negotiate on trade tariffs?

This latest agreement has been positioned as delivering growth and security for both nations and as an opportunity to deepen cooperation in emerging technologies, specifically in artificial intelligence, quantum computing and nuclear energy (including civil nuclear and small/fusion nuclear technologies).

The scale of commitment from key players

Securing $42/£31 billion in investment pledges from major U.S. technology firms is transformational. It appears the UK is establishing another evolution from Brexit, shifting towards a light-touch, tech friendly regulatory environment that the U.S. favours, over the EU's more interventionist policies. With the overall aim of attracting more tech investment, the negotiations on tariffs are simply a useful trade off to secure this, but with mixed success.

Forvis Mazars Chief Economist George Lagarias explains that tech investments are key for the UK to re-orient its economy in a difficult environment: “Drawing tech investments from the largest economy in the world is key for any country right now, but especially for the UK as it navigates a very difficult economic trade war come post-Brexit environment. The good news is that the British economy switched gears at the right time, becoming less dependent on finance and focusing more on the global technological race towards the fourth industrial revolution. It remains to be seen whether the rest of Europe and others could follow suit – something the U.S. is hoping for.

"Having said that, in an 'America First' world, which also includes slower growth, higher inflation and reduced global trade for which western economies remain very sensitive, the environment remains extremely challenging. The U.S. will retain control of those investments, as well as the steel market which was an essential trade-off for its own economic pledges if the country is to make good on its promise to bring the likes of car manufacturing and construction back to the country.”

Our latest C-suite barometer already highlights the U.S. as the top destination most businesses plan to invest in their expansion plans in the coming years, so how can international businesses benefit from the long-term impact and create opportunities from these pledges in UK tech?

UK Executive Committee Member and Technology Consulting Partner Asam Malik notes that the sectors most affected by this development are technology, finance, pharma, energy, and infrastructure and manufacturing: “Companies in these spaces must rapidly evaluate how to plug into this new transformational infrastructure, secure talent and prepare for regulatory shifts – or risk being left behind. 

“This investment will boost the UK’s efforts over the past five to ten years in creating more data centres to ensure business infrastructure, innovation, security and stability. What the tech sector needs to consider, and something regulators and authorities will be watching for, is the effect these pledges have on competition. We’ve already identified increased competition as one of the top growing trends and challenges that C-suite executives are facing. This could actually create more pressure with the combined dominance of Big Tech pledges and the critical component of human skills and talent that businesses need to make this successful – assets that are already scarce.”

The benefits, big risks and challenges

Some of the biggest and immediate benefits surround regulatory and public policy actions with, for example, more streamlined licensing regimes and the expectation of faster timelines and alignment between UK and U.S. regulators.  

The alignment of AI standards and benchmarks from institutions like the U.S. Center for AI Standards and Innovation (CAISI) and the UK AI Security Institute could result in more shared research programmes. The use of AI tools, automated labs and new data sets could advance sectors that need the most in this current climate, including healthcare, pharmaceuticals, biotech and life sciences research.

Malik highlights the continued regulatory uncertainty: “Although alignment is proposed, some national laws, data privacy regimes and export controls will still diverge. Businesses really need to stay on top of the evolving UK, U.S. and EU regulations. On top of this, the competition for essential resources, including human intelligence, skills and energy access, is already impacting the growth of businesses and this will only increase. Companies in the energy sector have a huge opportunity to diverge and adjust their model in response to this deal, as do supply chains of critical tech components, but for everyone else it’s time to invest in upskilling and talent to prepare for what’s next.”

Lagarias concurs: “The deal has strategic, geoeconomic implications. Companies must assess their strategic growth and expansion plans and consider how they can best operate in an environment where it is not business objectives driving the economy, but government and policy priorities. We’ve seen a surge from organisations stockpiling and rushing to consolidate operations as a result of the tariffs, but this is a stopgap measure. Treating it as anything more is essentially banking on the belief that things will eventually revert to what we previously considered normal.

“Fiscal priorities are starting to take more precedence to monetary objectives and governments will likely re-assert their leverage over businesses. As a result, it will be a more inflationary world, which means reassessing supply chains, risks to sustainability, culture and human rights. Organisations should either invest heavily in these areas or seek strategic counsel and support. C-suite executives and those they rely on need to deeply understand their sectors with the aim of updating and having more dynamic pricing models and strategies. It’s also important to be looking at risks from a different perspective and understanding their interconnectivity, through vigorous specialised internal audits and stress tests. AI governance will be an essential area of focus in the immediate future so running tech audits and making sure risks are addressed alongside understanding government priorities will put businesses in a stronger position of long-term resilience, growth and sustainability.”   

Expand, alt, shift

For large international businesses outside the UK and United States, there are some knock-on effects. The EU seems to be taking a more reserved approach to tariff discussions, potentially with some hesitation around being bought over in one long-term area at the sacrifice of another more immediate and constant need. Regardless, the tech prosperity deal serves its purpose – as an endorsed template for similar agreements in other regions.

As a result, we could see some shift in the top destinations businesses include in their expansion plans. Countries and regions with the most stable global supply chains supporting technology parts, while being able to offer stable regulation, sustainable energy resources, a pool of skilled labour, favourable logistics and attractive investment will provide the most lucrative locations.

Organisations with interests in competing jurisdictions should also reassess their positioning in light of rising UK-U.S. competitiveness in emerging tech – both in terms of R&D, domestic market attractiveness, regulatory attractiveness and the best ecosystems for innovation.

The next steps

Given all this, below are specific actions that business leaders should consider.

The overall consensus is that the Technology Prosperity Deal represents a significant shift in how the UK and U.S. see technology, infrastructure and regulation, with economic competition deeply intertwined. For international businesses, this opens both opportunities and competitive pressures C-suite can get ahead of now:

• Revise your strategy: reassess which parts of your business stand to gain most (or be most exposed) under this deal and potential developments in other regions.
• Consider investments where there is an opportunity to be an early mover and later ROI.
• Forge partnerships with local organisations, start-ups, universities, or local governments to tap into the growth zones and public incentives.
• Proactively prepare regulatory, compliance and sustainability frameworks to ensure you’re prepared for the demands of operating in this new tech ecosystem.

Ultimately, the best decision is to be proactive and prepare now for what’s next. In this fast-moving, complex climate, organisations that can align early with the emerging infrastructure, regulation and invest in R&D and talent resources will be more successful in securing competitive advantage.