https://www.politico.eu/newsletter/brussels-playbook/the-hagues-sos-to-brussels/

Report from Dealroom. I know VC/AI has its naysayers on this sub, but there's a lot of good stuff funded as a result of the below (as well as some less good stuff, undoubtedly)

EDIT: VC = Venture Capital!

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Growing VC, record EV, striking deep tech

The UK's tech innovation ecosystem is gathering pace: in the first half of 2026, VC investment in the country's startups reached $17 billion, up $2 billion on H2 2025 and more than double the H1 2025 figure. We compiled these and other numbers in the recent UK Innovation Update, presented together with HSBC Innovation Banking.

The funding numbers are still behind the outlier years 2021-2022, but the third consecutive quarter of growth points to a sustained recovery.

The UK remains the undisputed European leader by VC investment — while also showing the highest growth among the top 10 contenders. In H1 2026, the UK's startups raised more than double what their German peers did, and more than triple the French total.

This most recent growth is driven almost entirely by mega-rounds of $100 million or more, which accounted for more than half of the VC funding raised in the UK in H1 2026 — while pre-seed and seed stages shrank.

At least nine new unicorns were minted in the UK in H1 2026 through both funding rounds and exits. In total, the country currently sees 1,600 startups raise their first VC funding each year — that's almost a quarter of the European total.

The mega-rounds that are driving the UK's ecosystem growth this year predominantly went to AI companies. Over two-thirds of all money invested by VCs in UK startups in H1 2026, or $12.6 billion, went to AI startups; $10 billion of that amount arrived via mega-rounds.

The UK now captures 41% of European deep tech funding: almost twice the share in H2 2025. At $10.3 billion in total, that puts the UK ahead of Germany, France, Sweden, and Switzerland — combined.

The UK's innovation ecosystem is growing rapidly — but also stays efficient. When adjusted for scale, the UK generates ~3-4x more enterprise value and VC funding than France and Germany.

After only the first half of 2026, the UK ecosystem has already shown the biggest jump in enterprise value in its history, reaching $1.7 trillion — up from $1.3 trillion in 2025. Thanks to that, 49% of the ecosystem value now comes from companies founded after 2010.

In H1 2026, the UK's innovation ecosystem has largely conformed to the wider European growing trend — but overtook the other economies in the actual growth numbers. Like most of its continental peers, the UK showed the worrying decline in early-stage funding — which may result in a slower growth pace down the line. In the meantime, it continues to be the largest ecosystem in Europe by far and attracts the most VC funding — with the AI boom driving more and more mega-rounds.

https://open.spotify.com/episode/6jWRR3tiCqMols135LwNI3?si=VRu2A56QSMiDukKQnfRrOQ&utm\_source=copy-link

Great discussion between Wolfgang Munchau and Yanis Varoufakis countering the soft rejoin campaign that’s underway. Here’s a (Claude) summary of the main discussion points but well worth the listen.

Money: the budget hit would be brutal
The UK's old rebate is gone and won't come back — if the UK got one, France (especially under a Le Pen presidency) would demand one too, and the EU can't afford to give everyone a discount.

EU budget contributions are set to rise 20–40% in the 2027–2034 cycle. Germany's contribution alone could jump from ~€40bn to ~€70bn/year.

The UK, being not much smaller than Germany, would likely be on the hook for €40–60bn a year, paid in full, with no special treatment.

The "opt-out" mindset won't survive re-entry
Britain's historic pattern was wanting the parts of the EU it liked (single market access) without the obligations — a mindset both hosts say makes rejoining politically unsellable and was part of why Remain lost in 2016.

Example: the failed post-Brexit youth mobility scheme — the UK insisted EU students keep paying international fees (~£50k vs. ~£8k for UK students), killing the deal. A preview of how the UK negotiates halfway measures.

Old opt-outs (Euro, Schengen, the Charter of Fundamental Rights) are unlikely to be reinstated — individual member states (e.g., France, reportedly already objecting to UK access to an EU tech/startup fund) can and will block special treatment.

Three structural obstacles laid out explicitly
Pressure to join the Euro — not legally mandatory, but the EU would push hard because it wants the UK's large capital market pulled into a single monetary zone (to build the "capital markets union" it currently lacks).

Pressure to join Schengen — the UK/Ireland's separate travel-area arrangement would likely be challenged in negotiations.

Loss of opt-outs — seen as the biggest issue; any deal would probably mean re-entering "with tail between its legs," fully exposed to EU rules with no special carve-outs.

Why they say it's a bad idea even if it were possible
The EU itself is now more fragmented, indebted, and stagnant than when the UK left — piling up unpayable "sub-sovereign" debt rather than building genuine fiscal union.

The EU is falling behind in tech/AI — only one mid-tier AI model, a regulatory environment hostile to startups — while the UK's lighter-touch regulation has made it a better home for AI startups.

Rejoining would force the UK to adopt the EU's full regulatory stack — Digital Services Act, Digital Markets Act, crypto regulation, GDPR-style data law — which would undercut UK business models built around not having those rules.

The "single market" itself isn't the growth engine it once was: it was never extended to digital/services trade, and has become more of a regulatory burden than an efficiency driver.

Brexit has arguably shrunk the UK–EU trade deficit (EU exports to the UK fell too), a net positive they say gets ignored in the "Brexit disaster" narrative.

The closing jab
They dismiss the "the EU has become such a great club, Britain doesn't even deserve to rejoin" framing (from a recent Guardian piece) as reverse-psychology spin — "smoke and mirrors" — not a substantive case for membership.

Munchau's summary line: any UK government that actually sat down and negotiated the details would find it "a very, very hard sell," even to its own supporters, because most rejoin advocates aren't aware of these specifics.

https://archive.ph/SX3aj

Should Brexit have made Britain more economically liberal or more economically interventionist?

https://archive.ph/spTVP