I just think they realised it's a game of "would you rather?". Having been defeated many times on the logic of this argument, they've realised it works to say "would you rather I hit you with this wrench, or with the back of my hand?".
"Would you rather we ban e2e encyption and scare off your customers, or just stick a third end point in your datacenter so we can listen to what we want anyway". Very few people will *really* have a problem with this, despite the increased risk due to hacks etc.
Yes, absolutely other govs (UK) will follow suit.