The United States and the UK share an extensive and mutually beneficial trade and economic relationship, and each is the other's largest foreign investor. Domestic Political Situation

The government of the UK is led by Prime Minister Theresa May of the Conservative Party. Prime Minister May was able to form a Conservative minority government after concluding a deal for support from the Democratic Unionist Party (DUP), the largest unionist political party in Northern Ireland, which holds 10 seats in Parliament. The Conservatives granted the DUP more budgetary resources for Northern Ireland as a key part of the two parties' parliamentary support deal, and the DUP remains a significant factor in Brexit negotiations related to Northern Ireland. Brexit Negotiations and Relations with the EU

On March 29, 2017, Prime Minister May invoked Article 50 of the Treaty on European Union, formally giving notice of the UK's intention to leave the EU and opening a two-year window for conducting withdrawal negotiations. The first phase would deal with the terms of a withdrawal agreement, focusing initially on three priority topics: the status and rights of EU citizens living in the UK and UK citizens living in the EU, a financial settlement addressing remaining UK obligations to the EU, and arrangements for the border between Northern Ireland and the Republic of Ireland. On December 15, 2017, the European Council determined that sufficient progress had been made on the three priority topics to open the second phase of negotiations, dealing with the transition period and framework for future relations. The prime minister called for a custom tailored economic relationship with the EU rather than the UK choosing from an existing model such as Canada (free trade agreement) or Norway (a member of the single market/European Economic Area), or simply trading with the EU on World Trade Organization (WTO) terms. The draft suggested the possibility of a free trade agreement that avoids tariffs and quotas but has only limited coverage of services (including financial services) and less potential for regulatory cooperation and mutual recognition of standards. The UK continues to look to the United States for close partnership and has sought to reinforce its U.S. ties following Brexit. President Trump appears to have a largely positive view of the UK as well, but there have been points of tension and uncertainty in the relationship over the past year, arising on the UK side over both the substantive nature of some of the Trump Administration's policies and because of some of President Trump's statements and tweets. Although the UK cannot formally negotiate trade agreements until it leaves the EU, some suggest that positive indications of a likely future agreement with the United States could help bolster the UK's position in negotiations with the EU on the terms of Brexit and the UK's post-Brexit economic relationship with the EU. UK leaders have emphasized their continued commitment as a leading country in NATO, and the UK has taken a strong role in efforts to deter Russian aggression. Despite this close cooperation, U.S. officials have expressed concerns about cuts to UK defense spending and reductions in the size and capabilities of the British military in recent years. President Trump and some Members of Congress have expressed support for the idea of concluding a bilateral free trade agreement with the UK. Analysts believe that close U.S.-UK cooperation will continue for the foreseeable future in areas such as counterterrorism, intelligence, economic issues, and the future of NATO, as well as on numerous global and regional security challenges. With the UK commonly regarded as the strongest U.S. partner in the EU, a partner that commonly shares U.S. views, and an essential voice in efforts to develop stronger EU foreign and defense policies, some U.S. officials have conveyed concerns that the UK's withdrawal could make the EU a less capable and less reliable partner on security and defense issues.
Many U.S. officials and Members of Congress view the United Kingdom (UK) as the United States' closest and most reliable ally. This perception stems from a combination of factors, including a sense of shared history, values, and culture; a large and mutually beneficial economic relationship; and extensive cooperation on foreign policy and security issues.
Conservative-Led Minority Government Following 2017 Election
The government of the UK is led by Prime Minister Theresa May of the Conservative Party. Her leadership position was weakened after she triggered an early election in June 2017, which resulted in the Conservatives losing their absolute majority in the 650-seat House of Commons. Prime Minister May formed a government after the Conservative Party reached a deal for support from the Democratic Unionist Party, the largest unionist political party in Northern Ireland. The Labour Party, led by Jeremy Corbyn, performed unexpectedly well in the 2017 election and constitutes the largest opposition party.
Managing Brexit
The UK's pending exit from the European Union (commonly referred to as Brexit) is the central issue facing the government. Prime Minister May has sought to manage differing views on the UK's future relationship with the EU and the resultant divisions within her Cabinet and the Conservative Party. The UK intends to leave the EU single market and customs union, while pursuing a free trade agreement with the EU and seeking to partner with the EU on a range of other issues.
Brexit Negotiations
The UK has been engaged in complex negotiations with the EU about the terms of withdrawal and arrangements for a transition period. The prime minister opened the process in March 2017, and withdrawal negotiations are to be completed within two years. The first phase focused on citizens' rights, a financial settlement, and a difficult combination of issues related to Northern Ireland and the border between Northern Ireland and the Republic of Ireland. The two sides reached a broad understanding on these issues in December 2017 and the EU published a draft withdrawal agreement in February 2018, but many details and unresolved differences remain to be clarified and agreed upon.
In December 2017, the EU determined that sufficient progress had been made to begin talks on the future trade and economic relationship. With initial negotiating guidelines established in March 2018, the EU appears less optimistic than the UK about the possibility of a deep and ambitious agreement that includes areas such as financial services and regulatory cooperation.
U.S.-UK Relationship
Since deciding to leave the EU, the UK has sought to reinforce its close ties with the United States and reaffirm its place as a leading country in NATO. President Trump has expressed a largely positive view of the UK, but there have been tensions and backlash from the UK side over both substantive differences and various statements made by the President.
Most analysts believe that the two countries will remain close allies that choose to cooperate in many important areas, such as counterterrorism, economic issues, and the future of NATO, as well as numerous global and regional security challenges. President Trump and some Members of Congress have expressed support for the idea of concluding a bilateral free trade agreement with the UK after it leaves the EU (see CRS Report R44817, U.S.-UK Free Trade Agreement: Prospects and Issues for Congress, by [author name scrubbed]). The UK has the world's fifth-largest defense expenditure, but U.S. officials have expressed concerns about past UK defense cuts and their effect on the UK's military capabilities.
Given its role as a close U.S. ally and partner, developments in the UK, Brexit negotiations, and the UK's relations with the United States are of continuing interest to the U.S. Congress. This report provides an overview and assessment of some of the main dimensions of these topics. For a broader analysis of EU issues, see CRS Report R44249, The European Union: Current Challenges and Future Prospects, by [author name scrubbed].