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The Atlantic Partnership for Advanced Nuclear Energy could herald a ‘nuclear renaissance'.

Somewhat off radar due to the political pomp and fanfare, during President Trump’s recent state visit, the UK and US signed a new agreement, known as the Atlantic Partnership for Advanced Nuclear Energy. This aims to accelerate the development of nuclear power.

US Energy Secretary Chris Wright said the agreement would bring a ‘nuclear renaissance’, adding that it would enhance energy security and meet growing global power demands particularly from AI and data infrastructure.  The new agreement will streamline regulatory approvals, reducing the average licensing period for nuclear projects from up to four years to just two. The agreement will also involve collaboration on fusion energy research and a goal to end UK and US reliance on Russian nuclear materials by 2028.

It is hoped that the new agreement will also increase commercial partnerships between UK and US companies. Encouragingly, a number of deals have already been announced.US nuclear group X-Energy and UK energy provider Centrica have announced plans to build up to twelve advanced modular nuclear reactors in Hartlepool, with the potential to power 1.5 million homes. Other plans include the development of a micro modular reactor at the London Gateway Port involving US reactor company Last Energy and DP World.  Holtec, EDF and Tritax are also planning to develop a nuclear-powered data centre hub at the former Cottam coal-fired plant in Nottinghamshire. Meanwhile, Rolls Royce has started its application in the US for its Small Modular Reactor (SMR) design.

Besides creating numerous jobs and boosting the economy, it is hoped that nuclear energy will bring stable energy prices for UK consumers in the long-term. Unfortunately, nuclear power has diminished to 15% of UK electricity generation due to ageing reactors and decommissioned plants. This isn’t likely to materially change over the next decade, due to the long lead times in construction projects. While a ‘nuclear renaissance’ is underway, it is not going to help solve the cost-of-living crisis in the short-term.

During Trump’s visit he also signed a new technology partnership between the UK and US. The Tech Prosperity Deal is focused on developing the latest growing technologies like AI and quantum.  At the same time, Microsoft, Google and NVIDIA announced plans to invest a combined £31 bn in AI infrastructure such as new datacentres and computer chips.

This sounds too good to be true, but if all this investment goes ahead, the UK will need an awful lot more reliable and sustainable energy!

 

What have we been watching?

 

US equities appeared to run out of puff having recently touched a series of record highs. The US tech sector slipped back following AI chipmaker Nvidia’s high profile $100bn tie-up with OpenAI to build new datacentres and other AI infrastructure. A small handful of massive US tech stocks continue to dominate global equity markets. So far this year, the S&P 500 index is up over 13% but the equal-weighted S&P 500 index, which balances out the market capitalisation weightings within the index, is up over 7% in comparison!

Meanwhile, Federal Reserve (Fed) Chair Jerome Powell once again dampened hopes of US interest rate cuts which saw the yield on10-year US Treasuries climb back up above 4.1%. There were also concerns about a potential US government shutdown this week. Government funding runs out on the 30th of September unless Congress votes to authorise more spending. This could have major ramifications for the publication of US payroll data and the level of joblessness if government staff were to be furloughed! Trump also went on another tariff rant on social media saying that from the 1st October a 100% tariff on patented pharmaceuticals would be imposed  if a company hasn’t started building a manufacturing plant in the US! Most of the large pharma companies have plants in the US already but it appears as if Trump wants new ones too. He also put a 25% tariff on imported heavy trucks, 50% on bathroom vanities and 30% on upholstered furniture.

The geo-political situation remains uncertain. Trump endorsed Ukraine being able to re-take lost territory rather than come to a negotiated settlement, a shift in US policy towards the war. The Kremlin then said that the process of normalising relations with the US was ‘much slower’ than they would like, and that the idea of Ukraine could take back lost territory was ‘deeply mistaken.’ Taken together, these developments raised the risk of an escalation.

 

In the UK, Sir Keir Starmer is coming under renewed pressure. In the latest development, Andy Burnham, the Greater Manchester mayor, who is not currently an MP, has been approached by some Labour MPs to challenge Sir Keir Starmer to become Labour leader. Meanwhile, the UK ‘flash’ PMI business activity indicator for September doesn’t make for great reading! The service sector reading weakened to 51.9 while manufacturing remains in contraction at 46.3. The ASDA Income Tracker also showed discretionary income growth falling in August. Meanwhile, the OECD also predicted that the UK will have the highest level of inflation amongst G7 nations.

 

In Europe, the ‘flash’ composite PMI business activity indicator for September moved up to a 16-month high at 51.2. However, mixed fortunes remain within the Eurozone. For example, Germany saw the ‘flash’ PMI hit 52.4 ahead of the launch of its fiscal stimulus package in the fourth quarter.  However, France, with its ongoing political challenges, saw its activity PMI drop to a five-month low of 48.4.

 

In the US, the economy grew at a stronger pace than originally expected in the second quarter with a 3.8% increase in GDP compared with the 3.3% previously reported. This reflected a decrease in imports and better consumer spending. Meanwhile, US durable goods orders recovered in August after two months of decline aided by an increase in orders for military and civilian aircraft. US PCE core inflation was in line with expectations at 2.9% albeit still a way above the Fed’s 2% target.

 

Japan’s manufacturing activity contracted more than expected in September with the ‘flash’ PMI business activity indicator dropping to 48.4 albeit this was countered by the service sector which expanded to 53.0.

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Brent oil edged up above $69 as Trump appeared to change his tune over the war in Ukraine and as the UN re-imposed sanctions on Iran which it accused of continued nuclear escalation.

Finally, given the push to renewable energy such as nuclear power, an estimate of the economic cost of climate change. The more extreme weather that has hit Europe during 2025, from forest fires to devastating floods, is estimated to have cost at least €43bn according to the European Central Bank. More alarmingly, the cost is forecast to rise to €126bn by 2029. Sounds as if insurance bills, like temperatures, are climbing!

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