LONDON — Britain’s Trade Secretary Peter Kyle told POLITICO he is “not in the business of criticizing other countries” amid President Trump’s plan to require tourists to the United States to hand over their social media data. According to a proposal by the Trump administration published Wednesday, visitors to the U.S. — including from Britain — would have to submit five years of social media activity before being allowed through the border. The plans, which come shortly before hundreds of thousands of football fans are expected to travel to the U.S. to watch their teams compete in the World Cup this summer, have generated concern among some European politicians. “Every country takes very seriously the way that it protects its borders and makes sure that it has a grip on people who come into the country that are aligned with its own values and principles,” Kyle said when asked if he was worried about the plans. “I’m not in a business of criticizing other countries in the way that they do it, because we are certainly taking it very seriously for our own country.” Kyle spoke to POLITICO in California as part of a visit to advance trade talks and drum up investment alongside U.K. Technology Secretary Liz Kendall. Both Kendall and Kyle previously expressed criticism of Trump on social media before entering government. Kendall said “the American government is rightly passionate about freedom of speech and will follow its own values and principles there.”

LONDON — As governments around the world scramble to stay ahead in the frantic world of artificial intelligence, the U.K. is betting big on the next computing breakthrough: quantum. A national research program dating back over a decade has made the U.K. a leader in harnessing the properties of quantum physics to build computers capable of carrying out calculations in a fraction of the time taken by conventional machines. The program has given birth to several leading startups attempting to turn experimental efforts into large-scale, reliable computers that could give their owners an immense economic and national security advantage. Winning that race is a top priority for No. 10 Downing Street, which has identified quantum as one of six frontier technologies crucial to “U.K. security and sovereignty.” In a sign of its importance, Britain’s quantum prowess formed a central plank of the country’s technology partnership with the U.S. U.K. officials pointed to the industry as proof that the deal was not one-sided. Now, the government is preparing to significantly increase support for a small number of the most promising quantum startups, after Technology Secretary Liz Kendall said the U.K. must do “fewer things better.” According to six people familiar with discussions, the government plans to dedicate the bulk of a £670 million commitment for quantum computing to just a handful of startups, with payments tied to reaching certain technical milestones. Prime Minister Keir Starmer is expected to announce the plan early in the new year, two of the people said, though both cautioned that plans remain subject to change. “We are determined to unlock quantum’s benefits for society and the economy,” a spokesperson for the Department for Science, Innovation and Technology said, noting that the U.K. had backed “one of the largest commitments made to this technology of any government in the world.”  BIGGER BETS The U.K.’s early recognition of quantum’s potential has seen it capture 18 percent of global funding in the sector since 2020, according to a study by the Royal Academy of Engineering.  But there are fears that its lead could slip, with the U.S., China, Canada, Denmark, France and Germany all investing heavily, and some U.K. startups saying they are forced to look abroad to raise enough capital. A $1.1 billion takeover of leading British startup Oxford Ionics by U.S. rival IonQ this summer has only sharpened concerns, although the company plans to retain the U.K. as its R&D hub.  Winning that race is a top priority for No. 10 Downing Street, which has identified quantum as one of six frontier technologies crucial to “U.K. security and sovereignty.” | Mark Kerrison/Getty Images Jakob Mökander, director of science and technology policy at the Tony Blair Institute and co-author of a report warning that the U.K. risked squandering its lead in quantum, said: “Now is the time to make bets on promising startups that can grow into national champions.”  That’s been the key message in discussions between the sector and government officials on next steps, according to the people above.  “It is crunch time for quantum computing in the U.K. right now,” said Sebastian Weidt, founder of Universal Quantum.  Despite being based in the south of England, Weidt said the company has received more support from overseas, including a €67 million contract in Germany. France has also awarded €500 million to just five startups.  In contrast, Weidt said the U.K. has failed to move beyond small grants, arguing it needs to become a better customer of its “sovereign” companies or risk ceding “the great quantum computing foundations the U.K. has built over decades … to foreign players.”  “We need to see now more ambition, and we need to see more pace,” Gerald Mullally, CEO of Oxford Quantum Circuits, said, stressing that the U.K. must “act at a level of scale that is competitive relative to what we’re seeing in other nations.” LESS IS MORE Quantum computing is precisely the type of “critical sector where the U.K. has a global competitive edge” that the government should be getting behind, Ed Bussey, CEO of Oxford Science Enterprises, which backs university spin-outs, said. The industry now expects the government to put money where its mouth is, the people cited above said, with one suggesting a handful of companies could get up to £50 million each under the initiative. Procurement and government investment could also be forthcoming.  In recent weeks, the government committed to “leverage its procurement budgets to drive innovation,” including to “act as an early buyer for the best new technologies to de-risk investment, create demand, and pave the way to market.” As part of a “strategic reset,” the U.K.’s research and development funding agency UKRI will also become more “choiceful” in allocating £7 billion for scale-ups over the next four years to companies in areas where the U.K. has genuine international advantage, its CEO Ian Chapman has said. In a new five-year strategy, the British Business Bank also vowed to increase investment and take on greater risk “to support the most strategically important scale-up companies to stay in the U.K.”

BRUSSELS — The EU has struck a political agreement to overhaul the bloc’s foreign direct investment screening rules, the Council of the EU announced on Thursday, in a move to prevent strategic technology and critical infrastructure from falling into the hands of hostile powers. The updated rules — the first major plank of European Commission President’s Ursula von der Leyen’s economic security strategy — would require all EU countries to systematically monitor investments and further harmonize the way those are screened within the bloc. The agreement comes just over a week after Brussels unveiled a new economic security package. Under the new rules, EU countries would be required to screen investments in dual-use items and military equipment; technologies like artificial intelligence, quantum technologies and semiconductors; raw materials; energy, transport and digital infrastructure; and election infrastructure, such as voting systems and databases. As previously reported by POLITICO, foreign entities investing into specific financial services must also be subject to screening by EU capitals. “We achieved a balanced and proportionate framework, focused on the most sensitive technologies and infrastructures, respectful of national prerogatives and efficient for authorities and businesses alike,” said Morten Bødskov, Denmark’s minister for industry, business and financial affairs. It took three round of political talks between the three institutions to seal the update, which was a key priority for the Danish Presidency of the Council of the EU. One contentious question was which technologies and sectors should be subject to mandatory screening. Another was how capitals and the European Commission should coordinate — and who gets the final say — when a deal raises red flags. Despite a request from the European Parliament, the Commission will not get the authority to arbitrate disputes between EU countries on specific investment cases. Screening decisions will remain firmly in the purview of national governments. “We’re making progress. The result of our negotiations clearly strengthens the EU’s security while also making life easier for investors by harmonising the Member States’ screening mechanism,” said the lead lawmaker on the file, French S&D Raphaël Glucksmann. “Yet more remains to be done to ensure that investments bring real added value to the EU, so that our market does not become a playground for foreign companies exploiting our dependence on their technology. The Commission has committed to take an initiative; it must now act quickly,” he said in a statement to POLITICO. This story has been updated.

BRUSSELS — Britain’s top Europe minister defended a decision to keep the U.K. out of the EU’s customs union — despite sounding bullish on a speedy reset of ties with the bloc in the first half of 2026. Speaking to POLITICO in Brussels where he was attending talks with Maroš Šefčovič, the EU trade commissioner, Nick Thomas-Symonds said a non-binding British parliamentary vote on Tuesday on rejoining the tariff-free union — pushed by the Liberal Democrats, but supported by more than a dozen Labour MPs — risked reviving bitter arguments about Brexit. Thomas-Symonds described the gambit by the Lib Dems — which had the backing of one of Labour’s most senior backbenchers, Meg Hillier — as “Brexit Redux.” And he accused Ed Davey, the Lib Dem leader, of wanting “to go back to the arguments of the past.” The Lib Dems have drawn support from disillusioned Labour voters, partly inspired by the party’s more forthright position on moving closer to the EU. But Thomas-Symonds defended Labour’s manifesto commitment to remain outside the single market and the customs union. “The strategy that I and the government have been pursuing is based on our mandate from the general election of 2024, that we would not go back to freedom of movement, we would not go back to the customs union or the single market,” the British minister for European Union relations said. Thomas-Symonds said this remained a “forward-looking, ruthlessly pragmatic approach” that is “rooted in the challenges that Britain has in the mid 2020s.” He pointed out that post-Brexit Britain outside of the customs union has signed trade deals with India and the United States, demonstrating the “advantages of the negotiating freedoms Britain has outside the EU.” ‘GET ON WITH IT’ Speaking to POLITICO’s Anne McElvoy for the “Politics at Sam and Anne’s” podcast, out on Thursday, Thomas-Symonds was optimistic that a grand “reset” of U.K.-EU relations would progress more quickly in the new year. The two sides are trying to make headway on a host of areas including a youth mobility scheme and easing post-Brexit restrictions on food and drink exports. “I think if you look at the balance of the package and what I’m talking about in terms of the objective on the food and drink agreement, I think you can see a general timetable across this whole package,” he said. Pressed on whether this could happen in the first half of 2026,  the U.K. minister sounded upbeat: “I think the message from both of us to our teams will be to get on with it.”  The Brussels visit comes after talks over Britain’s potential entry into a major EU defense program known as SAFE broke down amid disagreement over how much money the U.K. would pay for access to the loans-for-arms scheme. The program is aimed at re-arming Europe more speedily to face the threat from Russia. Asked if the collapse of those talks showed the U.K. had miscalculated its ability to gain support in a crucial area of re-connection, Thomas-Symonds replied: “We do always impose a very strict value for money. What we would not do is contribute at a level that isn’t in our national interest.” The issued had “not affected the forward momentum in terms of the rest of the negotiation,” he stressed. YOUTH MOBILITY STANDOFF Thomas-Symonds is a close ally of Prime Minister Keir Starmer and has emboldened the under-fire British leader to foreground his pro-Europe credentials. The minister for European relations suggested his own elevation in the British government — he will now attend Cabinet on a permanent basis — was a sign of Starmer’s intent to focus on closer relations with Europe and tap into regret over a post-Brexit loss of business opportunities to the U.K. Fleshing out the details of a “youth mobility” scheme — which would allow young people from the EU and the U.K. to spend time studying, traveling, or working in each other’s countries — has been an insistent demand of EU countries, notably Germany and the Netherlands. Yet progress has foundered over how to prevent the scheme being regarded  as a back-door for immigration to the U.K. — and how exactly any restrictions on numbers might be set and implemented. Speaking to POLITICO, Thomas-Symonds hinted at British impatience to proceed with the program, while stressing: “It has to be capped, time-limited, and  it’ll be a visa-operated scheme. “Those are really important features, but I sometimes think on this you can end up having very dry discussion about the design when actually this is a real opportunity for young Brits and for young Europeans to live, work, study, enjoy other cultures.” The British government is sensitive to the charge that the main beneficiaries of the scheme will be students or better-off youngsters. “I’m actually really excited about this,” Thomas-Symonds said, citing his own working-class background and adding that he would have benefited from a chance to spend time abroad as a young man “And the thing that strikes me as well is making sure this is accessible to people from all different backgrounds,” he said. Details however still appear contentious: The EU’s position remains that the scheme should not be capped but should have a break clause in the event of a surge in numbers. Berlin in particular has been reluctant to accept the Starmer government’s worries that the arrangement might be seen as adding to U.K. immigration figures, arguing that British students who are outside many previous exchange programs would also be net beneficiaries.  Thomas-Symonds did not deny a stand-off, saying: “When there are ongoing talks about particular issues, I very much respect the confidentiality and trust on the ongoing talks.”  Britain’s most senior foreign minister, Yvette Cooper, on Wednesday backed a hard cap on the number of people coming in under a youth mobility scheme. She told POLITICO in a separate interview that such a scheme needs to be “balanced.” “The UK-EU relationship is really important and is being reset, and we’re seeing cooperation around a whole series of different things,” she said. We also, at the same time, need to make sure that issues around migration are always properly managed and controlled.” A U.K. official later clarified that Cooper is keen to see an overall cap on numbers. BOOZY GIFT As negotiations move from the technical to the political level this week, Thomas-Symonds sketched out plans for a fresh Britain-EU summit in Brussels when the time is right. “In terms of the date, I just want to make sure that we have made sufficient progress, to demonstrate that progress in a summit,” Nick Thomas-Symonds said. “I think that the original [post-Brexit] Trade and Cooperation Agreement did not cover services in the way that it should have done,” he added. “We want to move forward on things like mutual recognition of professional qualifications.” Thomas-Symonds, one of the government’s most ardent pro-Europeans, meanwhile told POLITICO he had forged a good relationship with “Maroš” (Šefčovič) – and had even brought him a Christmas present of a bottle of House of Commons whisky. “So there’s no doubt that there is that trajectory of closer U.K.-EU cooperation,” he quipped. Dan Bloom and Esther Webber contributed reporting.

LONDON — Australia hopes its teenage social media ban will create a domino effect around the world. Britain isn’t so sure.  As a new law banning under-16s from signing up to platforms such as YouTube, Instagram and TikTok comes into force today, U.K. lawmakers ten thousand miles away are watching closely, but not jumping in. “There are no current plans to implement a smartphone or social media ban for children. It’s important we protect children while letting them benefit safely from the digital world, without cutting off essential services or isolating the most vulnerable,” a No.10 spokesperson said Tuesday. Regulators are tied up implementing the U.K.’s complex Online Safety Act, and there is little domestic pressure on the ruling Labour Party to act from its main political opponents.  While England’s children’s commissioner and some MPs are supportive of a ban, neither the poll-topping Reform UK or opposition Conservative Party are pushing to mirror moves down under.  “We believe that bans are ineffective,” a Reform UK spokesperson said.  Even the usually Big Tech skeptic lobby groups have their doubts about the Australian model — despite strong public support to replicate the move in the U.K. Chris Sherwood, chief executive of the NSPCC, which has led the charge in pushing for tough regulation of social media companies over the last decade, said: “We must not punish young people for the failure of tech companies to create safe experiences online.  “Services must be accountable for knowing what content is being pushed out on their platforms and ensuring that young people can enjoy social media safely.” Andy Burrows, who leads the Molly Rose Foundation campaign group, argues the Australian approach is flawed and will push children to higher-risk platforms not included in the ban.  His charity was set up in 2018 in the name of 14-year-old Molly Russell, who took her own life in 2017 while suffering from “depression and the negative effects of online content,” a coroner’s inquest concluded.  Regulators are tied up implementing the U.K.’s complex Online Safety Act, and there is little domestic pressure on the ruling Labour Party to act from its main political opponents. | Ian Forsyth/Getty Images “The quickest and most effective response to better protect children online is to strengthen regulation that directly addresses product safety and design risks rather than an overarching ban that comes with a slew of unintended consequences,” Burrows said.  “We need evidence-based approaches, not knee-jerk responses.” AUSSIE RULES Australia’s eSafety commissioner Julie Inman Grant, an American tasked with policing the world’s first social media account ban for teenagers, acknowledges Australia’s legislation is the “most novel, complex piece of legislation” she has ever seen. But insists: “We cannot control the ocean, but we can police the sharks.” She told a conference in Sydney this month she expects others to follow Australia’s lead. “I’ve always referred to this as the first domino,” she says.  “Parents shouldn’t have to fight billion-dollar companies to keep their kids safe online — the responsibility belongs with the platforms,” Inman Grant told Australia’s Happy Families podcast.  But the move does come with diplomatic peril. Inman Grant has not escaped the attention of the White House, which is pressuring countries to overturn tech regulations it views as unfairly targeting American companies.  U.S. congressman and Trump ally Jim Jordan has asked Inman Grant to testify before the Judiciary Committee he chairs, accusing her of being a “zealot for global [content] takedowns.” She hit back last week, describing the request as an example of territorial overreach.  The social media account ban for under-16s is the latest in a line of Australian laws that have upset U.S. tech companies. It was the first to bring in a news media bargaining code to force Google and Facebook to negotiate with publishers, and was the first major economy to rule out changing laws to let AI companies train on copyrighted material without permission. The U.K. has also upset the White House with its existing online safety measures, and the Trump administration said earlier this year it is monitoring freedom of speech concerns in the U.K. Australia is used to facing down the Big Tech lobby, explains Daniel Stone, who advised the ruling Labor Government on tech policy. “Julie has the benefit of knowing the [political] cabinet is fully supportive of her position,” he said. “It defines what’s permissible across the whole system.”  The social media account ban for under-16s is the latest in a line of Australian laws that have upset U.S. tech companies. | Justin Sullivan/Getty Images “If there is a lesson for the U.K., it is that you don’t have a strong regulator unless you have a strong political leader with a clear and consistent agenda,” Stone adds.  “Australia has its anxieties, too, about pushing U.S. tech companies, but they carry themselves with confidence,” said Stone. “You have to approach Trump from a position of strength.”  Rebecca Razavi, a former Australian diplomat, regulator and visiting fellow at the Oxford Internet Institute, agrees. “The thinking is, we’re a mid-sized economy and there’s this asymmetry with tech platforms dominating, and there’s actually a need to put things in place using an Australian approach to regulation,” she said.  Other countries, including Brazil, Malaysia and some European countries are moving in a similar direction. Last month the European Parliament called for a continent-wide age restriction on social media.  SLOW DOWN Others are biding their time.  The speed at which Australia’s social media ban was approved by parliament means that many of its pitfalls have not been explored, Razavi cautioned.  The legislation passed through parliament last December in 19 days with cross-party and wide public support. “It was really fast,” she said. “There was a feeling that this is something that parents care about. There’s also a deep frustration that the tech companies are just taking too long to make the reforms that are needed.”  But she added: “Some issues, such as how it works in practice, with age verification and data privacy are only being addressed now.”  Lizzie O’Shea, a human rights lawyer and founder of campaign group Digital Rights Watch, agreed. “There was very little time for consultation and engagement,” she said. “There has then subsequently been a lot of concerns about implementation. I worry about experimenting on particularly vulnerable people.”  For now, Britain and the world is watching to see if Australia’s new way to police social media delivers, or becomes an unworkable knee-jerk reaction. 

LONDON — Scandal-hit Japanese tech firm Fujitsu has lost its grip on a lucrative contract to keep running Great Britain’s post-Brexit border with Northern Ireland, following mounting public pressure, two people with knowledge of the bidding process have told POLITICO. The firm at the center of the Post Office scandal — which saw faulty data from Fujitsu’s Horizon software lead to wrongful theft and fraud convictions of hundreds of innocent Post Office workers — had spearheaded a consortium bid for the £370 million contract to continue running the Trader Support Service (TSS), as reported earlier this year. The contract was awarded to another consortium late last month, according to the two people cited above. The 10-day cooling-off period after the contract was awarded ends on Tuesday. The Fujitsu-led consortium, which includes Liz Truss ally Shanker Singham’s firm Competere, has raked in more than £500 million since 2020 developing and operating the platform, which helps firms navigate the complicated post-Brexit customs arrangements between Great Britain and Northern Ireland under the Windsor Framework. While a new supplier will be taking control of TSS, Fujitsu retains the intellectual property rights to a core part of the existing platform, four people with knowledge of the process — including those cited above — confirmed. This means the new system will have to be built from scratch.  All of those cited in this story were granted anonymity to speak freely. There have been calls for Fujitsu to be stripped of its public contracts while sub postmasters affected by the scandal await full compensation. In August, more than 32 MPs and 44 peers wrote to U.K. Prime Minister Keir Starmer, urging him to block the firm from bidding for control of the TSS platform. In October, the government accepted all but one of the recommendations from Wyn Williams’ inquiry into the scandal, published in July, which concluded that at least 13 people may have taken their own lives after being accused of wrongdoing.  There has also been public scrutiny over the running of TSS. Cabinet Office Minister Nick Thomas-Symonds told lawmakers earlier this year he was investigating industry concerns about the service. “We are concerned to hear reports that the Trader Support Service is not providing a good quality of service,” cross-party peers on the Northern Ireland Scrutiny Committee wrote in an October report. Meanwhile, a report by the Federation of Small Businesses found current support relating to the Windsor Framework — including the TSS — was “falling short of expectations,” with 78 percent of Northern Irish businesses surveyed rating it as either “very poor” or “poor.” A spokesperson for HMRC, which awarded the contract, said: “We follow government procurement rules when awarding contracts, ensuring value for money for taxpayers. All bids underwent a robust evaluation and assurance process, and we will confirm the award in due course.” Fujitsu and Competere did not respond to requests for comment.

LONDON — For a nation addicted to political chaos, it wasn’t a bad metaphor. A stream of measures from Rachel Reeves’ budget leaked an hour before Britain’s finance minister delivered them Wednesday, when the independent fiscal watchdog accidentally published its market-moving 203-page analysis online. Britain’s problems, though, run far deeper than one spectacular budget leak. Keir Starmer was elected last year on a 10-year plan to change the country, and a vow to end “sticking-plaster politics.” But U.K. politics remains far stickier than the prime minister feared. Faced with a productivity downgrade and a need to calm the markets, his chancellor ditched her overzealous promises of last year — that Labour would not raise taxes on “working people,” come back “with more tax increases” or extend a freeze on income tax thresholds beyond 2028. Instead Reeves did all three, unveiling £26 billion of tax rises (on top of £40 billion last year) to balance the books and “beat the forecasts” of stagnation. As a result, Britain’s tax take will reach an all-time high of 38.3 percent of GDP in 2030-31. This time, Reeves insisted, it’s for real. Her mission is to finally end Britain’s economic doom loop — to stop the country living year-to-year, hand-to-mouth.  In some ways she made progress, more than doubling her fiscal margin for error to £21.7 billion. The Office for Budget Responsibility (OBR) watchdog ruled that she was more likely to meet her “fiscal rules” by 2030 than any chancellor since the Covid-19 pandemic.  Yet her position is still immensely fragile. The OBR said her margin remains relatively small and Britain’s public finances are “relatively vulnerable to future shocks” that would leave her coming back for more pain in future years. Reeves pointedly refused to rule out further tax hikes before 2029. And that’s if Reeves remains in the job at all. Facing dire polls, the Labour MPs who cheered her on Wednesday are chattering privately about whether to unseat Starmer next year. If they do, Britain will be onto its sixth prime minister since 2019. ‘THE GRAVITATIONAL PULL OF SHORT-TERMISM’ In short, “nothing in British economic policymaking survives the gravitational pull of short-termism,” said Cameron Brown, a former adviser to Conservative chancellors including Kwasi Kwarteng (whose “mini-budget” led to a market backlash so severe it forced Kwarteng and Prime Minister Liz Truss from office). Brown argued: “Reeves came in promising stability and long-term planning, but this fiscal event shows how quickly the system drags even the most disciplined chancellor back into the year-to-year cycle. “From my time in the Treasury, the pattern is familiar. We would spend months crafting multi-year strategies, only for the final decisions to be dictated by the latest OBR run, the next inflation stats or the politics of the Commons that week. The faces have swapped, but the architecture is the same.” This manifests itself in a few ways. Firstly, many of Reeves’ tax rises and spending cuts are backloaded in a way that will delay the pain until around or beyond the next U.K. general election, currently scheduled for 2029. Wednesday’s tax rises would net the Treasury £10.7 billion the year before the election, but £23.1 billion and £26.6 billion in the two years after it. Reeves, on a visit to an NHS hospital that will receive new funding, told POLITICO this was exactly the long-termism she wants. “When you’re making tax reform, it’s often not possible to change those rates overnight,” she said. Government officials insist the changes will be legislated for soon and start before 2029, so are locked in.  Yet that’s all very well until another chancellor unlocks them. Reeves declined to answer whether she believes she will still be in her job by the end of the decade. These sorts of accounting tactics are, of course, common in all budgets. Reeves did promise a big change of tack — to end Britain’s 15-year freeze on fuel duty from fall 2026 — but even then she still managed to extend it by another six months. THE BOND MARKETS RULE EVERYTHING Secondly, Britain’s finances remain at the mercy of small fluctuations to the bond markets.  A sharp rise in interest rates in recent years, along with smaller domestic demand for government debt, means U.K. debt costs more to serve than any other G7 country. Desperate to convey this disparity to the public, one young Labour MP, Gordon McKee, created a viral video explaining it using a stack of custard creams (a popular British biscuit).  Reeves’ higher fiscal buffer left the bond markets happy Wednesday. Internally, government officials shared images of a Bloomberg TV ticker that said: “U.K. markets rally, bond yields fall: U.K. traders welcome borrowing restraint.” Yet the OBR said debt will still rise from 95 to 96.1 percent of GDP by the end of the decade, twice the level of the average advanced economy. Even if the government meets its own fiscal rules, more will still be paid on debt interest than at almost any time in Britain’s post-war history. The markets’ dominance led to a stream of pre-budget leaks and briefings, many of which were designed to calm traders. One MP even said they weren’t worried about how their colleagues react — only the bond markets. LABOUR MPS WAIT IN THE WINGS But (and thirdly), Reeves’ colleagues matter too. The biggest cheer by far from Labour MPs during her speech was for the removal of the “two-child limit,” a Conservative policy that blocks benefit payments for third children in a family. MPs had failed to remove it last year, but months of internal pressure finally paid off. More widely, the budget was plainly progressive — even if, as Reeves admitted, it will have a cost for many of the “working people” she once promised to protect. The chancellor juxtaposed tax hikes on £2 million homes, pension contributions and savings pots juxtaposed against a higher minimum wage and help for energy bills. She pointed to distributional analysis that showed it will help the poorest tenth of Brits the most and the richest tenth the least. Yet her MPs’ immediate shout of “more!” showed the pressure will not stop there. Some have bigger ideas. Many have long complained about the dominance of OBR forecasts, and one Labour MP — just before the leak — complained that “putting the OBR on a pedestal” makes the problems of short-termism even worse.  Others wonder about having a big bang budget at all, given it leads to months of speculation, market fluctuations and leaks. One veteran MP wondered aloud on Wednesday night: “Isn’t there another way we can do it in 21st century Britain?” Then, finally, there is the question of what sort of chancellor Reeves will be; tax-raising, redistributive and pouring funding into public services, or slashing regulation in the name of growth. She insists she can be both, but her critics — especially among conservatives — believe she has gravitated to the former. While Britain’s growth projection was revised up to 1.5 percent in 2025, it was revised down for every future year. Inflation is now projected to fall to the Bank of England’s 2 percent target only in 2027, a year later than previously thought. And while real spending on government departments will continue to rise, the increase slows down from 4 percent in 2025/26 to 0.7 percent by the end of the decade. “Britain remains in a bind,” Ruth Curtice, chief executive of the Resolution Foundation, an economic think tank, told POLITICO. “On the one hand, the political system continues not to have a serious conversation about how to pay for an aging and ailing population. On the other, both parties have now significantly raised personal taxes.” Adrian Pabst, deputy director of the National Institute of Economic and Social Research, a nonpartisan research institute, added: “While [Reeves] has built a larger fiscal buffer against shocks, it’s not clear how her budget will raise economic growth based on higher business investment. “Higher tax, higher spend, no significant reduction in the ballooning welfare bill and no path of people who are inactive into work. There is as yet no clear bold plan to get the UK economy firing on all cylinders.” Reeves perhaps put it best herself, surrounded by nurses in a small room in London’s University College Hospital. “If you are asking, is this a budget I wanted to deliver today? I would have rather the circumstances were different,” she told journalists. “But as chancellor, I don’t get to choose my inheritance, and I have to live in the world as it is.”

LONDON — The wait is finally over. After weeks of briefings, speculation, and U-turns, Chancellor Rachel Reeves has set out her final tax and spending plans for the year ahead. As expected, there is plenty for policy wonks to chew over. To make your lives easier, we’ve digested the headline budget announcements on energy, financial services, tech, and trade, and dug deep into the documents for things you might have missed.  ENERGY  The government really wants to bring down bills: Rachel Reeves promised it would be a cost-of-living budget, and surprised no one with a big pledge on families’ sky-high energy bills. She unveiled reforms which, the Treasury claims, will cut bills by £150 a year — by scrapping one green scheme currently paid for through bills (the Energy Company Obligation) and moving most of another into general taxation (the Renewables Obligation). The problem is, the changes will kick in next year at the same time bills are set to rise anyway. So will voters actually notice? The North Sea hasn’t escaped its taxes: Fossil fuel lobbyists were desperate to see a cut in the so-called Windfall Tax, which, oil and gas firms say, limits investment and jobs in the North Sea. But Rachel Reeves ultimately decided to keep the tax in place until 2030 (even if North Sea firms did get a sop through rules announced today, which will allow them to explore for new oil and gas in areas linked to existing, licensed sites.) Fossil fuel lobbyists, Offshore Energies UK, were very unimpressed. “The government was warned of the dangers of inaction. They must now own the consequences and reconsider,” it said. FINANCIAL SERVICES Pension tax changes won’t arrive for some time: The widely expected cut in tax breaks for pension salary sacrifice is set to go ahead, but it will be implemented far later than thought. The thresholds for exemption from national insurance taxes on salary sacrifice contributions will be lowered from £60,000 to £2,000 in April 2029, likely to improve forecasts for deficit cuts in the later years of the OBR’s forecasts. The OBR has a markets warning: The U.K.’s fiscal watchdog warned that the price-to-earnings ratio among U.S. equities is reminiscent of the dotcom bubble and post-pandemic rally in 2021, which were both followed by significant market crashes. The OBR estimated a global stock market collapse could cause a £121 billion hike in U.K. government debt by 2030 and slash U.K. growth by 0.6 percent in 2027-28. Even if the U.K. managed to stay isolated from the equity collapse, the OBR reckons the government would still incur £61 billion in Public Sector Net Financial Liabilities. Banks back British investments: British banks and investment houses have signed an agreement with the Treasury to create “invest in Britain” hubs to boost retail investment in U.K. stocks, a plan revealed by POLITICO last week. Reeves also finally tabled a cut to the tax-free cash ISA allowance: £12,000 from spring 2027 (the amount and timings also revealed by POLITICO last week), down from £20,000, with £8,000 slated for investments only. Over-65s will keep the full tax-free subscription amount. Also hidden in the documents was an upcoming consultation to replace the lifetime ISA with a “new, simpler ISA product to support first-time buyers to buy a home.” No bank tax: Banks managed to dodge a hike in their taxes this time, despite calls from the IPPR for a windfall-style tax that could have raised £8 billion. The suggestions (which also came from inside the Labour Party) were met with an intense lobbying effort from the banks, both publicly and privately. By the eve of the budget, City figures told POLITICO they were confident taxes wouldn’t be raised, citing the high rate of tax they already pay and Reeves’ commitment to pushing for growth through the financial services industry. TECH ‘Start, scale, stay’ is the new mantra:  Startup founders and investors were in panic mode ahead of the budget over rumored plans for an “exit tax” on wealthy individuals moving abroad, but instead were handed several wins on Wednesday, with Reeves saying her aim was to “make Britain the best place in the world to start up, to scale up and to stay.” She announced an increase in limits for the Enterprise Manage Scheme, which incentivizes granting employees share options, and an increase to Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) thresholds to facilitate investment in growing startups. A further call for evidence will also consider “how our tax system can better back entrepreneurs,” Reeves announced. The government will also consider banning non-compete clauses — another long-standing request from startups. Big Tech will still have to cough up: A long-standing commitment to review a Digital Services Tax on tech giants was quietly published alongside the budget, confirming it will remain in place despite pressure from the Trump administration. The government will ‘Buy British’ on AI: Most of the government’s AI announcements came ahead of the budget — including plans for two new “AI Growth Zones” in Wales, an expansion of publicly owned compute infrastructure — meaning the only new announcements on the day were a relatively minor “digital adoption package” and a commitment to overhaul procurement processes to benefit innovative tech firms. But the real point of interest on AI came in the OBR’s productivity forecasts, which said that despite the furor over AI, the technology’s impacts on productivity would be smaller than previous waves of technology, providing just a 0.2 percentage point boost by 2030. The government insists digital ID will ultimately lead to cost savings. | Andrea Domeniconi/Getty Images OBR delivers a blow to digital ID: The OBR threw up another curveball, estimating the cost of the government’s digital ID scheme at a whopping £1.8 billion over the next three years and calling out the government for making “no explicit provision” for the expense. The government insists digital ID will ultimately lead to cost savings — but “no specific savings have yet been identified,” the OBR added. TRADE  Shein and Temu face new fees: In a move targeted at online retailers like Shein and Temu, the government launched a consultation on scrapping the de minimis customs loophole, which exempts shipments worth less than £135 from import duties. These changes will take effect from March 2029 “at the latest,” according to a consultation document. Businesses are being consulted on how the tariff should be applied, what data to collect, whether to apply an additional administration fee, as well as potential changes to VAT collection. Reeves said the plans would “support a level-playing field in retail” by stopping online firms from “undercutting our High Street businesses.”  Northern Irish traders get extra support: Also confirmed in the budget is £16.6 million over three years to create a “one-stop shop” support service to help firms in Northern Ireland navigate post-Brexit trading rules. The government said the funding would “unlock opportunities” for trading across the U.K. internal market and encourage Northern Ireland to take advantage of access to EU markets.  There’s a big question mark over drug spending: Conspicuously absent was any mention of NHS drug spending, despite U.K. proposals to raise the cost-effectiveness threshold for new drugs by 25 percent as part of trade negotiations with the U.S., suggesting a deal has not yet been finalized. The lack of funding was noted as a potential risk to health spending in the Office for Budget Responsibility’s Economic and Fiscal Outlook, which was leaked ahead of the budget. 

LONDON — A vast swathe of Britain’s government-wide budget leaked almost an hour ahead of time Wednesday, in an apparent Whitehall blunder that’s already got the opposition Conservatives demanding an inquiry.  Scrutiny documents posted on the website of Britain’s fiscal watchdog the Office for Budget Responsibility (OBR) — normally made public once Chancellor Rachel Reeves sits down following a House of Commons speech — lay bare the impact of Reeves’ latest tax-and-spend statement on the British economy, and detail a raft of the policy measures she will take.  The documents have since been removed, but the OBR makes clear that Reeves will unveil £26 billion-worth of tax rises — and that the U.K.’s tax take will hit a record 38 percent as a proportion of GDP by 2031.  The British economy is forecast to grow by just 1.5 percent over the OBR’s current forecast period, 0.3 percent slower than projected in March, with the watchdog blaming poor productivity growth. Speaking in the House of Commons just before the budget announcement kicked off, Tory Leader Kemi Badenoch condemned the “unprecedented leak” and demanded an investigation to “punish those responsible.” Prime Minister Keir Starmer rejected the need for a leak inquiry, stressing it was “literally about 25 minutes before the budget will be set out in full, where we’ll take further decisions. The chancellor will set it out.” The Office for Budget Responsibility said Wednesday: “A link to our Economic and fiscal outlook document went live on our website too early this morning. It has been removed. “We apologise for this technical error and have initiated an investigation into how this happened. “We will be reporting to our Oversight Board, the Treasury, and the Commons Treasury Committee on how this happened, and we will make sure this does not happen again. “Our Economic and fiscal outlook and supporting documents will be released when the Chancellor has finished her speech.” This developing story is being updated.

LONDON — Criminal networks are “weaponizing children” to commit torture and murder by recruiting them through multiplayer video games and smartphones — and parents often have no idea what’s happening, the boss of Europe’s law enforcement agency warns.  These groups now pose the greatest single criminal threat to the European Union because they destabilize society by targeting children and destroying families, said Catherine De Bolle, executive director of Europol.  “The weaponization of children for organized crime groups is what is going on at the moment on European soil,” she said in a joint interview with POLITICO and Welt. “They weaponize the children to torture or to kill. It’s not about petty theft anymore. It’s about big crimes.”  The “worst case” Europol has seen was of a young boy who was ordered “to kill his younger sister, which happened,” she said. “It’s cruel, we have never seen this before.”  She even suggested that children and young people are being used by hostile states and hybrid threat perpetrators as unwitting spies to eavesdrop on government buildings.  The Europol chief is in a unique position to describe the criminal landscape threatening European security, as head of the EU agency responsible for intelligence coordination and supporting national police. In a wide-ranging discussion, De Bolle also cautioned that the growth of artificial intelligence is having a dramatic impact, multiplying online crime, described how drug smugglers are now using submarines to ship cocaine from South America to Europe, and described an increasing threat to European society from Russia’s hybrid war.  De Bolle’s comments come amid an ongoing debate about how to police the internet and social media to prevent young and vulnerable people from coming to harm. The greatest threat facing the EU from organized crime right now comes from groups that have “industrialized” the recruitment of children, she said: “Because [they are] the future of the European Union. If you lose them, you lose everything.” FROM GAMING TO GROOMING Criminals often begin the process of grooming children by joining their multiplayer video games, which have a chat function, and gaining their trust by discussing seemingly harmless topics like pets and family life.  Then, they will switch to a closed chat where they will move on to discussing more sinister matters, and persuade the child to share personal details like their address. At that point, the criminals can bribe or blackmail the child into committing violence, including torture, self-harm, murder and even suicide.  Europol is aware of 105 instances in which minors were involved in violent crimes “performed as a service” — including 10 contract killings. Many attempted murders fail because children are inexperienced, the agency said. “We also have children who do not execute the order and then, for instance, [the criminals] kill the pet of the child, so that the child knows very well, ‘We know where you live, we know who you are, you will obey, and if you don’t, we will go even further to kill your mother or your father,’” De Bolle warned.  Criminals will also offer children money to commit a crime — as much as $20,000 for a killing, sometimes they pay and sometimes they don’t. While these networks often target children who are vulnerable because they have psychological problems or are bullied at school, healthy and happy children are also at risk, De Bolle said. “It’s also about others, youngsters who are not vulnerable but just want new shoes — shoes that are very expensive.”  Sometimes young people are even recruited for hybrid war by state actors, she said. “You also have it with hybrid threat actors that are looking for the crime as a service model — the young perpetrators to listen to the foreign state, to listen to the communication around buildings.” Once police catch a child, the criminals abandon them and move to groom a new child to turn into a remote-operated weapon.  “Parents blame themselves in a lot of cases. They do not understand how it is possible,” she said. “The problem is you don’t have access to everything your child does and you respect also the privacy of your children. But as a parent, you need to talk about the dangers of the internet.” DRUGS AND AI ARE ALSO A PROBLEM Among the new criminal methods crossing Europol’s desks, two stand out: The use of so-called narco-submarines to smuggle drugs like cocaine from South America into the EU and the growth in AI technology fueling an explosion in online fraud that enforcement agencies are virtually powerless to stop.  Instead of shipping cocaine into the ports of Hamburg, Rotterdam and Antwerp through containers, criminals have diversified their methods, De Bolle said. One key route is to sail semi-submersible vessels from South America to Europe’s North Atlantic coast, where speedboats meet them and offload the illegal cargo via Portugal, according to Europol’s information.  While Europe now is “overflooded with drugs,” criminal organizations may make more money, more easily through online fraud, she said. “Artificial intelligence is a multiplier for crime,” she said. “Everything is done a thousand times more and faster. The abuse of artificial intelligence lies in phishing emails — you do not recognize it very easily with phishing emails anymore because the language is correct.”  She said “romance fraud” is also “booming,” as “people look for love, also online.” “With deepfakes and with voice automation systems, it’s very difficult for a law enforcement authority to recognise that from a genuine picture. The technology is not there yet to [tell] the difference,” De Bolle added.  De Bolle said Europol needed to be able to access encrypted phone messages with a judge’s authorization to disrupt these criminal networks. “When a judge decides that we need to have access to data, the online providers should be forced to give us access to this encrypted communication,” she said. Otherwise, “we will be blind and then we cannot do our job.”