Faisal Islam: Will the US tech bromance turn around the UK economy?

In the old Camden Town Hall opposite London’s St Pancras station, away from the white tie and tails of the pageantry at Windsor Castle, was perhaps the most substantive display of the consequences of Donald Trump’s state visit.

In front of Prime Minister Sir Keir Starmer, many members of the British and US cabinets and the cream of the European tech industry, a highly-crafted video played, featuring the long history of UK science. It included George Stephenson, Charles Babbage, Ada Lovelace, Alan Turing and Sir Demis Hassabis, with dozens of UK start-up companies from every corner of the country listed.

It was a cross between a UK government investment promotion video and the Danny Boyle 2012 Olympic Opening Ceremony, except for one crucial detail – it was voiced by Jensen Huang, the American Nvidia artificial intelligence (AI) and microchip magnate.

This week, Trump said the tech tycoon “was taking over the world” and the boss of the company, which hit a market value of $4tn (£2.9tn) this summer, appears to have gone all-in on the UK in quite an extraordinary way.

Huang shouted out the long list of British entrepreneurs Nvidia has taken stakes in and expanded after a further £2bn of investment.

He invited Business Secretary Peter Kyle and his US counterpart Howard Lutnick on to the stage to address the assembled British entrepreneurs. Lutnick, the face of the global trade war, said: “We are America first, but we are not America only….we want to win, we want you to win.”

This was one vignette from the striking array of the world’s biggest Silicon Valley tech companies turning on the transatlantic investment tap.

The “tech bromance” embraced the UK this week with a hat-trick of multi-billion investments from Nvidia, Microsoft and Google.

It was an early win for the government’s strategy in attracting this sort of investment to help transform Britain and the UK economy long term.

But it is not necessarily proof that this strategy will win in transforming the economy, living standards, and turning the tide on more general negative vibes from the economy and politics.

Indeed, the infectious enthusiasm of the US tech giants about Britain jarred with the more general air of pessimism floating around the country.

Huang himself said he was surprised by Britain’s image of itself. “This is the week that I declare that the UK will be an AI superpower,” he told me, crediting the prime minister and Kyle.

“You [Brits] just don’t appreciate it. Come on. You’re too humble,” he said pointing to the history and reality of tech research coming from the UK.

Microsoft announced a £22bn investment and the extension of the Stargate AI plan – intended to expand AI infrastructure over the next four years – to the UK.

It’s what Microsoft chief executive Satya Nadella described as the pathway for AI becoming a general purpose technology, like electricity or the internet. It feels rather ubiquitous already.

On Tuesday, UK Chancellor Rachel Reeves opened Google’s new data center in Essex with its president, Ruth Porat. Google had just announced a £5bn investment in this type of infrastructure and in Deepmind, the London-based AI research company run by Nobel Prize winner Sir Demis Hassabis.

Porat is one of the most connected business leaders in the world, born in Manchester, and a regular on presidential trade missions. While she stressed the “profound opportunity” for the UK, she also said there was “work to do”.

But amid the upbeat talk, a surprising attack on the array of US investment came from former Deputy PM and Facebook senior executive Sir Nick Clegg. Britain was “clinging on to the coattails of Uncle Sam” with “crumbs from the Silicon Valley table”.

“Not only do we import all their technology, we export all our good people and good ideas as well,” he said.

While there was no explicit quid pro quo in terms of digital taxes or changes to the online safety bill in the Tech Prosperity Deal signed this week, it is clear that the UK has a degree of soft alignment with the US administration’s approach, especially when it comes to AI.

Lutnick explained to the start-up audience that he scrapped Biden-era AI Safety initiatives in favour of “leaning forward” on the technology. The UK government has mirrored some of these moves.

The big picture here is that even the three US giants that put in the lion’s share of the tech investment last week are now worth $9tn on US stock markets. They are ready to some shopping, and considerable sums are coming to the UK.

The plan is that the Silicon Valley stardust will be sprinkled on the scientific Golden Triangle of Oxford-Cambridge-London – “and don’t forget the Open University in Milton Keynes”, said Kyle.

So what of the familiar lament of losing our best technology and not being able to grow the biggest companies in the world?

DeepMind might be considered an example of that in one way. It was bought by Google for £400m in 2014. Another way to look at it, however, is that the new appreciation for the tech giant is partly because of London-based Deepmind’s research into all aspects of frontier technology.

The recent surge in its share value to above $3tn is rooted in a perception that it is no longer lagging behind in the AI race.

Chip designer Arm Holdings is the other UK champion that was sold off to foreign ownership. Its technology is central to the chips in almost all smartphones, including iPhones. There are suggestions that Arm may look at manufacturing its own chips, as the West looks to de-risk supply chains.

It is sometimes forgotten that Huang was very close to buying Arm Holdings in 2022, before regulatory authorities investigated the deal on competition grounds under the previous Conservative government.

When I raised this with Huang, he sighed: “Don’t remind me… I tried”.

Despite important foundational work in this area being done by the previous government, under Rishi Sunak and Jeremy Hunt, it is clear that this company felt burnt by its treatment, and were delighted to engage when Kyle turned up in his T-shirt in Silicon Valley last year.

This may, however, point to the eventual consequence of this UK-tech bromance. It may help explain the “pro-growth” direction given to regulators, including the firing of the chair of the CMA in January.

This flood of US capital thinks it is getting a safe and secure home in the UK, at least, safer than anywhere else in Europe.

The consequences could be the UK economy becomes a tech laboratory for the world, or perhaps mainly the US giants. The state visit certainly seemed to have an undertone of the UK joining forces with the US in a long term AI tech battle with China.

Huang said this was not a “zero sum game”. “President Trump wants to win and so does President Xi. Its possible they both can.”

So on its own terms, this week showed the government successfully attracting significant investment that will help grow the economy. That does not solve the immediate challenges in the public finances, for example, ahead of the Budget.

The US, even San Francisco for example, can show that tech-fuelled booms often leave many others behind.

There are obvious questions about the widespread rollout of AI already impacting certain industries, and entry-level graduate jobs. Before AI becomes a mass creator of jobs, it will visibly cost those of clerks, junior accountants, paralegals, and creatives.

But the biggest boost might be a sense of optimism created for the UK.

The UK is now all in on AI. Britain will become increasingly dependent on this US tech. But the US giants, at the same time, need British knowhow. It could come to define the economy and the country for decades to come.