UK Economy Shows Resilience Ahead of October Budget
The UK economy grew by 0.1% in August 2026, exceeding expectations of a slight contraction, according to the Office for National Statistics (ONS). Growth reached 0.7% over the three months to August, supported by increased output in manufacturing, oil and gas extraction, and energy supply. Services output remained flat, while construction contracted.
Chancellor John Healey described the figures as a sign of economic resilience amid global uncertainty, including conflicts in Europe and the Middle East, higher energy prices and borrowing costs. The International Monetary Fund (IMF) has also upgraded its UK growth forecast for the year, pointing to a relatively stronger outlook compared with other major advanced economies. The figures come ahead of the government’s upcoming Budget, with Healey pledging to address cost-of-living and challenges facing businesses while maintaining fiscal discipline. However, continued weakness in construction and concerns over inflation underline the challenges facing the UK economy.
For UK-Swedish business relations, the outlook highlights the importance of monitoring UK economic growth, fiscal policy and investment conditions, particularly in manufacturing, energy and AI infrastructure.
The Wait for a New Government Continues in Sweden – as Thand Ringqvist is Given the Exploratory Mandate
This Monday, the Speaker of the Riksdag gave the leader of the Centre Party, Elisabeth Thand Ringqvist, the exploratory mandate to form a government. The decision comes after the leader of the Social Democratic Party, Magdalena Andersson, was voted down, with 99 votes in favour and 248 against in the first prime minister vote on 15 October.
The Swedish general election was held on 13 September and has been followed by a long and difficult process to form a government, as the results showed a slim majority for the opposition with 176 mandates to the Tidö parties’ 173. In the more than 30 days since the election, the parties have held meetings in various configurations but have struggled to overcome their respective “red lines” and find common ground. Recently, the Centre party invited opposition party leaders, party secretaries, parliamentary group leaders and economic policy spokespersons, along with leaders of Swedish trade and business organisations, to a political initiative aimed at developing a shared overview of Sweden's political and economic challenges. The meeting was the first time the four leaders had met in person, but it did not involve any concrete discussions about forming government.
After Monday’s press conference, at which it was announced that Thand Ringqvist would be given the exploratory mandate, she explained in a comment to Swedish Television (SVT) that her aim was to help find a solution to the government formation deadlock rather than to become prime minister herself. The Speaker of the Riksdag, Andreas Norlén, said that the Centre Party leader’s name was mentioned by both the right and left wings of the political spectrum after last week’s prime ministerial vote, and that it was therefore appropriate to allow Thand Ringqvist to consult the parties to explore options for forming a centrist government.
NATO Outlines New Strategy at Warsaw Security Forum
NATO’s Supreme Allied Commander Europe, General Alexus Grynkewich, has outlined a new strategy to counter a potential Russian attack, built around three principles: “block, blunt and break”. Drawing on lessons from the war in Ukraine, the plan focuses on stopping an advance at the border, weakening attacking forces through coordinated operations across land, air and sea, and disrupting supply chains and command networks. NATO maintains that a military confrontation with Russia is not imminent or inevitable but stresses the need to be prepared.
The announcement comes amid growing European concerns over Russian conventional and hybrid threats, including suspected sabotage, cyberattacks and incursions into European airspace. At the same time, divisions within the NATO alliance are becoming more apparent as the Trump administration pursues engagement with Moscow, including a recent agreement concerning Russian diesel exports, while European governments maintain pressure on Russia through sanctions.
For Sweden and the UK, the developments underline the importance of European defence cooperation, NATO readiness and coordinated responses to hybrid threats. They also highlight the challenge of maintaining a united transatlantic approach to European security as political priorities diverge across the alliance.
Focus sector: AI & Technology
Letter Regarding AI Sovereignty from the Council for Science and Technology (CST) to the Minister for AI Published
On 19 October, a letter, sent on 30 July by the Council for Science and Technology (CST) to the Minister for AI, was published. The letter, addressed to the Rt Hon Kanishka Narayan MP, offered support for delivering on the promises made by the Minister upon his appointment regarding AI and addressing the challenge of securing AI sovereignty. The letter began by explaining the Council’s role as a high-level independent advisory body to the government on science and technology issues. It went on to describe the importance of AI sovereignty, stressing that the choices made by the UK today shape the country’s long-term competitiveness, resilience, public trust, and strategic autonomy.
The Council defines AI sovereignty as “having sufficient agency across the AI value chain to deliver the UK’s chosen outcomes, capture economic and public value for the UK, and maintain resilience under duress.” It warns that “without deliberate and urgent action, the UK risks becoming a high-value AI customer, rather than a country able to shape the technology and its usage”. In their executive summary of the recommendations for government going forward, the Council highlight four points:
The Council recommends that the Government develop a “UK AI Sovereignty Plan” based on a comprehensive overview of the AI ecosystem.
The Council recommends that the Government establish clear governance and coordination mechanisms to translate the AI Sovereignty Plan into action.
The Council recommends that the Government invest not only in models, but also in people, skills, organisations, data, trust, and adoption to build the foundation of long-term UK AI capability.
The Council recommends that the Government maintain trusted access to the leading AI models while building selected UK capability that strengthens independence, resilience, and future choice.
The UK has launched the UK Sovereign AI Fund, investing £1m–£20m in British AI start-ups.
UK Publishes an AI Risk Management Toolkit
The Department for Science, Innovation and Technology published an AI Risk Management Toolkit in September, aimed at supporting those involved in designing, operating, procuring or delivering AI-enabled products, as well as providing a starting point for teams looking to implement good risk management practices.
The toolkit builds on established risk management principles and processes for government departments and UK public sector organisations in their routine operations. The tools also complement other established toolkits, such as the Cyber Assessment Toolkit. The toolkit includes a guide to AI risk assessment, a set of critical questions to identify potential risk, a workbook to record identified risks, assessment and corresponding mitigation actions, as well as an AI Risk Monitoring Dashboard, which provides an overall overview of the risk profile of the AI solution.
Swedish Supercomputer Sferical One Launches
Since late summer, Sferical One, a shared AI supercomputer, has been in operation. It was officially launched last week and represents an investment of more than SEK 1 billion. Built by and for AstraZeneca, Ericsson, Saab, SEB, and Wallenberg Investments, with SKF as a strategic partner, the supercomputer will be used to develop and apply AI within their respective industries.
In a press release, Sferical AI’s CEO Jenny Nordlöw explains that Sferical One enables companies to train and run AI models on a sovereign platform. Instead of companies building individual infrastructure, Sferical One pools investment, computing capacity and expertise, which the partners argue will allow some of Sweden’s largest companies to share infrastructure, develop solutions together and exchange knowledge across industries.
Nvidia CEO Jensen Huang Visits Sweden
Last week, Nvidia CEO Jensen Huang visited Stockholm and attended the launch of Sferical One. The new supercomputer uses 16 of Nvidia’s AI-server GB300 NVL72 systems, meaning that a total of 1 152 Blackwell Ultra GPUs work together. SvD reported that Huang described himself as a “responsible optimist” and said during a press conference that it is important to develop technology that ensures AI is safe.
The visit came alongside the announcement of a deeper collaboration between Volvo Cars and Nvidia to develop safe autonomous driving in future Volvo models. The new technology will be introduced in a next-generation Volvo car, combining Volvo’s safety systems and engineering expertise with Nvidia’s AI technology and accelerated data processing.
As part of his European tour, Huang also announced a further US$2 billion dollar investment in Europe, stating the continent must be part of the AI race. This investment is exemplified by the new AI hub set to open in Stockholm, with Nvidia partnering with Norrsken, the company founded by Klarna co-founder Niklas Adalberth, and supplying the hub with Nvidia’s latest AI technology when it opens next year.