BAB CEO Update

BAB will continue to urge the UK government, if they want these promised dollars to convert into actual dollars, to focus on the operating environment, on tax, labor and energy costs and a more business friendly regulatory environment. 

I was in London for the last two weeks, including for the State Visit in which business played a remarkably large role.  Traditionally, visits by a head of state to the UK revolve around the ceremony, pageantry and high diplomacy that the UK does so well, and this was all there, but alongside this was an extraordinary focus on the business and investment relationship between the US and the UK. 

At their meeting at Chequers, the President and PM signed a new MOU entitled the Technology Prosperity Deal which envisages a shared commitment to work together on AI innovation, the development of quantum computing capability and civil nuclear power capacity, and other future facing technologies.

Like the Economic Prosperity Deal, which it builds on, and the Atlantic Declaration which was signed by the predecessor governments in both countries (and is no longer talked about), this is a non-binding MOU, a framework for future more detailed agreements and a statement of intent. 

In fact, we are pleased to see that there is a clear and continued line of progress from the Atlantic Declaration to this new MOU, with many of the same themes and objectives.  BAB will do its usual detailed analysis of the Tech Prosperity Deal in the next few weeks and track progress that is made.  The agreement envisages a Ministerial Level Working Group to be established within six months to push this agenda along and BAB will make sure that we and our members are able to contribute to the discussions. 

Accompanying this agreement was a long list of investment commitments made by US companies into the UK and, whether planned or not, one or two going the other way.  The numbers involved are enormous and the range of participating companies is very impressive.  Kudos to the UK team at the Embassy, the NYC and other Consulates and the entire DBT team for corralling all of these announcements together to coincide with the visit; it was a remarkably effective campaign which successfully dominated the business news cycle during the week. 

The commitments are made in good faith by the companies who made them, but they are also contingent.  In some case there will be huge hurdles to overcome in the approval of new technologies (nuclear, AI), planning, regulation and other issues, and in all cases, these commitments will be subject to a further assessment of the operating environment in the UK, commercial terms and other usual diligence processes.  At BAB, we will continue to urge the UK government, if they want these promised dollars to convert into actual dollars, to focus on the operating environment, on tax, labor and energy costs and a more business friendly regulatory environment. 

On AI especially, and perhaps also with civil nuclear power, the UK is benefiting from the decisions made by previous administrations, and confirmed by this, that it will take a more pro-innovation approach to regulation than is being followed in the EU.  Nvidia, Google, Microsoft and others all talked about the environment in the UK for the development of AI capabilities and you never hear the same optimism about the EU. 

Movement on trade issues did not happen and our assessment is that further tariff reductions for the UK are now unlikely.  In fact, unless the Supreme Court rules them unlawful, we should expect this new tariff regime to be the new baseline for global US trade policy for the foreseeable future; the revenue being raised is very significant and it is just very hard to imagine a future presidential candidate arguing for a reduction and the implied encouragement for companies to move jobs off-shore to lower cost economies. And as I said in my last newsletter, the Uk should brace itself for the possibility of Section 232 tariffs on pharmaceutical products. 

Parenthetically, one final point about the state visit; watching and then reading the President’s speech at the State Banquet at Windsor Castle, I was struck by the unequivocally positive nature of the comments about the UK, its historic contribution to the world and to the founding principles of the USA.  I often hear Americans talk about the UK like this, but it seems to have rather gone out of fashion amongst British politicians. 

Also while I was in London, BAB was pleased to welcome Paul Atkins, Chair of the SEC for a discussion about his approach to regulation in the financial services space.  His comments were widely reported and thanks to Latham & Watkins for sponsoring the event and the ICAEW for hosting.