Further Opportunities for US Tech Investment in the UK

US investment accounted for an impressive 42% of all funding in the UK in 2024, underlining the depth of transatlantic cooperation. Yet, despite this strong foundation, more can be done to remove barriers that are holding back even greater levels of American tech investment.

A strong partnership but with room for improvement

Simon Gleeson, Head of the US Desk, said:

Reflecting on July 4th the UK & US continue to have an unparalleled level of cooperation across many areas, with the US accounting for 42% of total funding in the UK in 2024, but there are still barriers stifling further American tech investment.

While the recent UK-US trade agreement has set a constructive tone, it has yet to fully resolve several key issues preventing deeper tech cooperation.

The Digital Services Tax: A barrier to growth

One of the most significant obstacles is the UK’s Digital Services Tax (DST), which has become a sticking point for many large US tech firms operating in the UK.

The recent UK US trade agreement creates a good foundation to address the issues holding back further US & UK tech cooperation. The UK’s Digital Services Tax, for the sake of 2%, has frustrated large US companies who have invested heavily in the UK’s tech eco-system. Removing or reducing this tax would encourage increased US tech investment, creating a financial boost for British businesses.

The DST, introduced as a 2% levy on revenues from digital services, disproportionately impacts major US-based firms – companies that are often some of the largest contributors to the UK’s growing digital economy.

This tax on revenues from some of the largest US investors in the UK across search engines, social media and online marketplaces is projected to bring in +£800m in revenues for HMRC. But this is a relatively small amount compared to the £16.2 billion of capital raised in 2024 powering the UK to compete on a global stage.

Aligning on regulation to lead globally

The potential for further growth is immense, but it will require proactive cooperation between the UK and US governments – especially in the areas of regulation, data sharing, and emerging technologies.

Tech innovation is driving much-needed growth, but both governments need to prioritise policy and a supportive regulatory framework to lead together globally, as questions remain around how the UK & US share data, AI regulation and cyber security.

Accelerating AI and infrastructure investment

Artificial intelligence continues to be a major draw for global capital, and the UK’s ambition to become a world leader in AI hinges on both domestic and foreign investment.

Simon concluded:

Initiatives such as the AI Opportunities Action Plan need to be accelerated if the UK is to continue to attract the same level of overseas investment and required capital to fund building AI infrastructure. This is something increased US tech investment can help with, if the right moves are made to encourage it.

Would you like to know more?

If you would like to discuss any of the above, please speak to your usual Blick Rothenberg contact or Simon Gleeson using the form below.