Prioritising national development, UK Chancellor of the Exchequer Rachel Reeves said the government hopes to encourage more businesses to invest in the country, so it remains a global competitive leader.
A significant element of that is developing AI infrastructure, or data centres.
Industrial impact
AI runs on data centre servers and requires specialised hardware and software, given the amount of processing power and energy it needs to run. Part of the government’s Budget plans involve two AI Growth Zones in Wales to continue last year’s plans to advance planning and infrastructure that supports economic growth.
However, some within the industry say it isn’t enough.
“[The] Budget is a reality check,” said Andy Aitken, co-founder and CEO of Honest Mobile. “We urgently need more policies that let businesses grow faster, invest bigger and hire more.
“The UK needs a growth story that lets companies, from SMEs to the FTSE100, confidently invest in their people and scale up. That’s the fair and necessary choice to get the economy moving – and it benefits everyone: workers, customers, communities.”
The mission-critical potential of UK data centres
Data centres are now increasingly seen as critical for driving AI growth the government wants. Last year, after data centres were classed as critical national infrastructure in the UK, the 2024 Autumn Budget announced plans to make the country more of a technology hub to attract international interest.
Already, US AI inference platform Groq will be opening its first UK data centre in London this year. Additionally, Equinix recently pledged £4 billion (US$5.28 billion) to construct and operate a high-performance data centre campus in Hertfordshire – as well as Zoom recently confirming new plans to open a UK data centre in 2026.
The government’s continued interest in AI Growth Zones shows how demand for AI innovation continues to grow across the country. It is the hope, Pulsant CMO Mark Lewis told Capacity, that funding will boost local infrastructure, business and skills programmes.
“But industry involvement in shaping these plans is critical, whether it’s planning to support the infrastructure behind AI and expand existing sites, ensuring energy supply or building the skills needed to take UK AI to a global stage,” he explained. “While there’s plenty to welcome, it’s also important to recognise and support existing regional digital infrastructure capabilities, including encouragement for local and national government departments to exploit that sovereign infrastructure.
“It’s fair to say 2026 is shaping up to be the year of repatriation, resilience, and regional rebalancing.”
As AI Growth Zones continue to emerge in more regional locations in the UK, Lewis said there will be a growth in edge data centres. This will “open up new opportunities for sectors like smart manufacturing and transport,” he said.
He added: “They offer more sustainable, cost-effective infrastructure, contributing to a more balanced national digital economy.”
Can the UK sustain this level of digital growth?
While the UK has been slower than others perhaps to adopt new and disruptive technologies, experts say that, with the right investment and focus, the country could become a model for sovereign AI development. This could in turn attract greater investment from large enterprises and support the economy overall.
According to the OBR, the UK is currently growing at roughly 1.5% a year.
“This means every plan for innovation needs a practical foundation,” said Matt Hawkins, founder and CEO of CUDOCompute. “AI-driven growth can only happen when the underlying infrastructure behind it is strong, sustainable and ready to scale. That means having reliable, sovereign compute capacity and clean, affordable power to power to drive it – which has been a key blocker to date.”
To ensure British businesses and researchers stay at the forefront of AI, new plans will back firms and scientists with the right tools to succeed and to seize the opportunity for British workers and growth.
According to the GOV.UK website, the government will act as a “first customer” for promising UK start-ups who are building high-quality AI hardware products but are struggling for investment. This is reinforced by a £100 million commitment from the government to give British startups a greater competitive edge internationally.
“AI Growth Zone data centres will house billions of pounds of hardware. Our goal is to see British chips deployed alongside established vendors,” the government website said.
Hawkins added: “If these zones are going to deliver the impact the Chancellor is banking on, we need to match investment in innovation with the energy and digital infrastructure that supports it.
“Backing renewables and future proofing compute is how we turn ambitious Budget goals into real economic progress.”
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