How will £150 billion investment benefit Britain?
U.S. President Donald Trump’s commitment to America’s so-called “special relationship” with the U.K. this week helped fuel a record $200 billion package of investments into Britain. Trump’s historic two-day state visit to the country ended Thursday, after the president enjoyed a banquet at Windsor Castle with the royal family and talks with Prime Minister Keir Starmer, alongside business leaders. On Wednesday evening, it was announced that investment giant Blackstone and logistics real estate firm Prologis had joined the fray of companies promising major investments into the U.K., bringing the total pledged during the trip to £150 billion ($204 billion). The British government said it marked the biggest package of inward investment ever announced on a state visit, with Blackstone’s investment alone slated to be worth £100 billion over the next decade. Other investment pledges have come from Microsoft , which announced plans to invest $30 billion in the U.K. by 2028, as well as Nvidia , Alphabet , OpenAI and Salesforce , with the investments focusing on AI and data center development. Meanwhile, a bilateral deal aimed at simplifying the build-out of nuclear power stations in both the U.K. and the United States was also announced. CNBC spoke to market watchers about how the influx of capital could bolster the U.K. — and the challenges that remain. Good news for the economy — but hurdles remain Microsoft CEO Satya Nadella told U.K. broadcaster the BBC earlier this week that he expected Big Tech’s investments into AI to give Britain’s economy a major boost in as little as five years. It’s much needed; the U.K. economy flatlined in July , piling further pressure on Finance Minister Rachel Reeves ahead of her November budget update. With questions abound about the government running out of fiscal headroom, inward foreign investment will be cheered by officials. Andrew Goodwin, chief U.K. economist at Oxford Economics, told CNBC that the planned investments would help Britain close the gap with the U.S. in terms of AI development – but stressed it is not enough to rapidly reignite the country’s economy. “Our research suggests this is likely to be a slow burner rather than providing a large up-front boost to output,” he said. “And there’s plenty of other headwinds, such as worsening demographics and low investment in other sectors, that will mitigate the boost to GDP growth from AI over the coming years.” Meanwhile, Duncan Edwards, CEO of BritishAmerican Business, told CNBC’s “Squawk Box Europe” on Thursday that it remained to be seen exactly how much of the money pledged actually made it to Britain. “It’s been a pretty flawless 24 hours … from a U.K. government perspective — they couldn’t really have asked for a better slew of announcements coming over the last three days,” he said. “[But] you have to have a little bit of caution about the numbers. You know, promised dollars, famously, are not the same as actual dollars. So you just need to watch what happens over the next months and years to see what actually gets committed of the announcements that have been made.” Challenges to ‘AI superpower’ status Jim Wright, who manages Premier Miton’s Global Infrastructure Income Fund, also told CNBC the swathe of investments was “clearly welcome, and good news for the moribund U.K. economy” — but would not be the silver bullet that transformed the U.K. into an AI superpower, an idea laid out by Nvidia CEO Jensen Huang . “The recent experience in the USA has suggested that the cost and availability of power is one of the biggest constraints to hyperscale datacenter growth, and the UK already has issues with capacity at peak times, and some of the highest electricity prices in the world,” Wright explained. “One answer will be nuclear power … but the timeframe suggests we are perhaps a decade away from meaningful capacity from this source,” he said. Nuclear Nuclear power was one of the week’s big beneficiaries, with British officials touting a “golden age” of nuclear energy development thanks to a deal aimed at cutting red tape for nuclear power station buildouts. Carole Nakhle, CEO of London-based energy consultancy Crystol Energy, told CNBC in an email that the energy deal was a strategic move to simultaneously reduce trade friction and support “the U.K.’s ambitious nuclear agenda.” “However, many important details are still missing, particularly regarding how the deal will be implemented and what specific commitments each side is making,” she said. “It is also unclear how much of the agreement reflects legally binding deliverables versus broader political signaling, especially in the nuclear space.” A clear winner: The U.S.? Other market watchers have raised questions about who will ultimately benefit from the capital injection, given the U.K.’s fading star power among global capital markets. “The challenge from an investment point of view is where will the shareholder value accrue from that innovation, given challenges to U.K. capital markets,” Richard Clode, portfolio manager at Janus Henderson, told CNBC. “Unfortunately, we would expect much of the fruit from this AI investment will be captured by U.S. technology companies directly or via acquisition[s], while new, successful, scaled U.K. AI companies will still seek to list in the U.S.” That said, Clode acknowledged that the country’s traditional stronghold sectors, like pharmaceuticals, engineering and healthcare, should get a boost from greater AI capabilities. “Further innovation in these areas is reliant on scaled AI infrastructure, which is why the announcements on new AI [datacenter] projects from Alphabet, Microsoft, Stargate, Nscale and Coreweave are so important,” he said.
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