W.39 Policy Watch

The Policy Watch is a weekly update which aims to provide concise insights into the current policy landscape. Tailored for our members and individuals interested in international affairs, this update offers a brief yet comprehensive summary of key developments affecting policy decisions and political trends both globally and locally.

Global
The UK has secured a major, forward-looking investment win in technology but suffered a significant setback on the immediate, traditional trade issue of steel tariffs, revealing the limitations and priorities of the current US trade policy. 

The Tech Prosperity Deal 

• The Tech Prosperity Deal (TPD) is a landmark bilateral agreement signed by US President Donald Trump and UK Prime Minister Keir Starmer. 

• Massive Financial Investment: The deal is valued at $350 billion, combining public funding and, predominantly, private investment from major US tech corporations such as Nvidia, OpenAI, Google, and Microsoft 

• Focus on Strategic Sectors: Cooperation is centred on four key areas: Artificial Intelligence (AI), creating an AI “growth zone” in north-east England and a new supercomputer in Essex, civil nuclear energy, with plans to develop 12 advanced nuclear reactors in northern England to boost energy security, quantum computing R&D and 6G Telecommunications 

• The pact is expected to create up to 17,500 new jobs, 15,000 in the UK and 2,500 in the US. 

US tariffs on UK steel 

• A parallel, highly anticipated deal to slash US steel tariffs on UK exports to 0% was shelved at the last minute, just hours before Trump’s arrival in the UK 

• Instead of elimination, UK steel exports will continue to face a 25% tariff, though this is still half the 50% rate applied to the EU, providing the UK a competitive advantage. 

• The deal collapsed over longstanding US concerns that the UK could act as a “backdoor” for cheap steel from other countries (like China) to enter the US  

Review
While the UK’s competitive edge over Sweden in terms of its US steel trade seems to have halved, it will be valuable to keep an eye on the outcomes of this TPD and how it may reshape foreign and domestic relationships. 

Local
Sweden’s newly presented 2026 budget outlines major tax cuts, higher defence spending, and targeted social measures, with important implications for UK–Sweden trade and cooperation. 

Sweden 

• On 22 September 2025, the Swedish Ministry of Finance submitted its Budget Bill for 2026 to the Riksdag, introducing measures worth SEK 80 billion (approx. £6 billion).  

• Key proposals include corporate and personal tax cuts and a temporary halving of VAT on food to 6% from April 2026 through end-2027, aimed at easing cost pressures and stimulating demand. 

• Defence spending will rise by SEK 26.6 billion, lifting the budget to 2.8% of GDP in 2026. Additional allocations target housing allowances, healthcare, education, and civil protection, signalling expanded state investment across multiple sectors   

Europe 

• These measures sit within a broader EU and NATO security framework, where Sweden’s expanded military spending complements regional commitments. For the UK, currently negotiating participation in the EU SAFE defence procurement fund, Sweden’s spending growth highlights potential for industrial collaboration and cross-border supply chains. 

• According to the UK Government’s Sweden Trade and Investment Factsheet, bilateral trade reached £33.4 billion in the year to Q1 2025, up nearly 30% year-on-year. Sweden’s fiscal expansion focused on consumption, investment, and procurement, suggests further opportunities to strengthen this trend.  

Review
For BSCC members, the 2026 budget points to growing opportunities in defence, infrastructure, and consumer markets, reinforcing the chamber’s role in supporting trade, investment, and partnership between the UK and Sweden.