The UK has signed a landmark Tech Prosperity Deal with the US, triple lock pensions are set to cost the government far more than expected, and public borrowing is surging past forecasts. Each of these stories carries big implications, for your money, your job prospects, and the broader economy.
🇬🇧🇺🇸 Tech Prosperity
During President Trump’s state visit to the UK, he and Prime Minister Starmer signed the “Tech Prosperity Deal”, focused on developing technologies such as AI, quantum computing, and nuclear energy.
The deal marks one of the largest tech investment pledges in recent times with US tech firms, led by Microsoft, Nvidia, and OpenAI committing to £31 billion of investment to boost the UK’s AI infrastructure. Plans include building data centres, deploying GPUs (graphics processing units), and the creation of a supercomputer. Other parts of the deal include an AI growth zone in the Northeast of England. The area will receive special support in planning permission and energy provision for hosting AI infrastructure.
What does this mean for workers and households?
More skilled roles are likely in R&D, data engineering, infrastructure building, and digital roles, with the government estimating 7,600 jobs could be created. Better tech infrastructure could enable improved AI tools in public services, and advance innovations in health, energy, and climate tech. While AI and quantum dominate the deal, the UK government say the partnership will promote the building of new nuclear reactors, protecting households from large energy price swings due to fossil fuels. There is also hope that this deal will create a lasting boost to the UK’s productivity and GDP, with Google CEO Satya Nadella hoping for results in just five years.
🔒 Triple Locked
The UK’s triple lock guarantee ensures that the state pension rises each April by whichever is highest: inflation, average earnings growth, or 2.5%. Under the latest figures (May-to-July 2025), wage growth hit 4.7%, making this the metric that will almost certainly trigger the pension increase in April 2026. With inflation running lower at 3.8% this means pensioners are in line for a substantive, inflation-busting rise.
But this lift doesn’t come cheap. The triple lock adds further pressure to already constrained public finances, and Labour’s commitment to keep it until, at least, 2029 means the costs will only keep rising. The OBR estimates the annual cost of the triple lock will reach £15.5 billion, three times higher than what was originally expected.
There are mixed implications for households. For a pensioner, this increase means more income, at worst in line with inflation. However, the frozen tax brackets mean that next year some pensioners will earn over the £12,570 tax free allowance, making them liable to taxation. Non-pensioners may also face a greater tax burden if the government sees to finance rising pension costs that way.
The big question that will face the government over the coming years is whether to adapt the tax thresholds to avoid new burdens for pensioners, a difficult situation considering government borrowing is at its highest level since the start of the pandemic.
UK Borrowing Explodes Past Forecasts
Britain’s public finances have taken another hit, with government borrowing climbing to its highest level since the pandemic. In the first five months of the fiscal year, the Treasury borrowed £83.5 billion, significantly overshooting the £72.4 billion the Office for Budget Responsibility had forecast.
August alone told a stark story. Borrowing reached £18 billion, nearly 50% higher than the OBR’s expected £12.5 billion gap between spending and income. That kind of miss has fuelled fresh doubts about the government’s ability to keep fiscal plans on track at a time when the Chancellor is already under pressure to balance the books.
Markets reacted swiftly. UK gilt yields ticked higher, a reflection of investors demanding greater compensation for holding government debt. For households, the consequences may be significant. It is almost certain that taxes will rise in the upcoming Budget, as the government tries to claw back some of their deficit, while rising yields may feed through to mortgage rates.
💼 Unpacked
Fiscal year – The year used for government accounting. In the UK, it runs from 1 April to 31 March the following year.
AI growth zone – The north-east will receive special support in the construction of new data centres. The locations are Blyth in Northumberland, and Cobalt Park in North Tyneside.
Quantum computing – A type of computing that uses quantum mechanics phenomena to perform complex calculations far beyond the capabilities of even the most powerful supercomputers.
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