The UK recently classified data centres as Critical National Infrastructure as they become more prevalent and relevant to the needs of tech across industries. This designation places data centres on equal footing with other critical sectors like energy and water, so there is a prioritised amount of support from the government, especially during emergencies.
This would mean that more data centres might begin to open, which could be highly beneficial. Fort starters, this would improve the UK’s digital infrastructure greatly, where cyberattacks and other technological disruptions are not as heavy on the economy and day-to-day operation.
The government cosigning data centres also makes the UK a place investors are confident in, with AI startups also beginning to grow, which in turn brings in more business.
Experts Share Their Views
Experts across industries have given their insights on what the rise of data centre infrastructure and support would mean for the UK, from the benefits, to the challenges and risks. This is what they said:
Our Experts:
- David Mitchell, Founder & CEO, XYZ Reality
- Chris Morris, Partner, Shoosmiths
- Scott Dylan, Founder, NexaTech Ventures
- Lars Nyman, CMO, CUDO Compute
- David Bloom, CEO and Co-founder, Goldacre
- Rajesh Sennik, Partner, KPMG UK
- Dan Smale, Senior Service Owner, Fasthosts ProActive
- Alex Sharp, Chief Projects Officer, Data Centres, Nscale
- Richard Clifford, Director of Solutions, Keysource
- Cathal Griffin, CRO, Asanti Data Centres
- Ben Pritchard, CEO, AVK
- Aleksei Gaidov, Director, Uniwide Formations
David Mitchell, Founder & CEO, XYZ Reality
“AI and scientific supercomputing are fuelling a race for data centre space across the world. New investment in critical data infrastructure is always welcome, especially if the UK wants to keep pace with the technological and scientific ambitions of its global counterparts.
“Wherever data centres are located in the UK, constructing them effectively, cost-consciously and with strict environmental controls is critical. Local communities should be consulted throughout the process. These considerations will become crucial as AI and the scientific sector put more pressure on our existing data centre and national grid capacity.”
Chris Morris, Partner, Shoosmiths
“The impact which Data Centres will have on the UK economy over the next decade cannot be underestimated. The Data Centre sector is seeing a surge in demand to meet the current and future needs of the digital economy, supporting cloud services and the rise of Artificial Intelligence.
“This week we have seen (a) Amazon Web Services announce a planned 5-year £8 billion investment into the UK, (b) the Government announcing that Data Centres will be designated Critical National Infrastructure and (c) the announcement of a new £4 billion proposed Data Centre facility in Hertfordshire.
“This new investment will generate many jobs at all levels of the supply chain, including construction, facility maintenance, engineering and telecommunications. The UK is already one of the main Data Centre hubs and is perfectly positioned to capitalise on its skilled workforce to meet the rising demands of AI. It is, in a way, the engineering of the future.
“Of course, there are challenges around availability of power (especially where there are competing needs such as housing), concerns around the planning system and potential building on green belt or ‘grey’ belt land.
“These are issues which the government are going to need to tackle pretty fast to facilitate the types of investment, construction and power needs being talked about, but the new UK government is sending a clear message that the UK is open for business when it comes to the digital infrastructure sector.”
Scott Dylan, Founder, NexaTech Ventures
“The establishment of data centres in the UK would undoubtedly have a profound economic ripple effect. First, it would create highly specialised jobs across IT, engineering, cybersecurity, and support services, providing skilled employment opportunities while fostering innovation within the local workforce. This aligns with the UK’s strategic push towards becoming a global leader in the digital economy.
“Furthermore, data centres would act as magnets for tech firms and startups, especially those in AI, blockchain, and cloud computing, creating hubs of digital innovation. The infrastructure they provide would enable faster, more efficient processing of vast data sets, accelerating technological advances across various sectors, from healthcare to finance.
“However, the environmental considerations cannot be overlooked. Data centres are notoriously energy-intensive. The challenge is ensuring that the UK’s commitment to green energy aligns with the expansion of such facilities. One viable solution would be to mandate that data centres operate on renewable energy, which could strengthen the UK’s position as a leader in sustainable tech while mitigating the environmental footprint.
“On a social level, while the introduction of data centres can initially lead to gentrification and rising property prices in nearby areas, it can also revitalise local communities, offering opportunities for education, skills training, and further employment. Policymakers must balance these changes to ensure that the benefits are equitably distributed.
“Overall, if managed correctly, the UK’s designation as a data centre hub could not only bolster its economy but also enhance its reputation as a forward-thinking, tech-driven nation.”
Lars Nyman, CMO, CUDO Compute
“The UK’s potential designation as a hub for data centres powering AI infrastructure could well be similar to unfurling a modern-day Industrial Revolution. However, unlike the smokestacks of the past, today’s revolution spits out teraflops. In the UK, this could translate to billions in added GDP, scores of new jobs, and bolstered tech sectors from Cambridge to Cornwall.
“However, with great (computing) power comes great responsibility—or should I say, a great environmental footprint. The environmental impact is significant —each data centre could consume up to 30,000 households’ worth of energy. The UK’s national grid could face unprecedented stress if not managed sustainably.
“Also, the benefits might not be evenly distributed. While urban areas could thrive, rural regions might see little to no benefit. This could exacerbate existing socio-economic divides.
The UK has a chance to set a global standard by ensuring these data centres are as green as the rolling hills of the countryside they’re built upon. Renewable energy sources, innovative cooling techniques, and strict regulations can mitigate environmental impacts.”
David Bloom, CEO and Co-founder, Goldacre
“This signals a welcome and positive change, which has been a part of a series of engagement that the industry has been having with DSIT.
“This important conversation and decision is indicative of the data sovereignty agenda which we believe will become ever more prevalent in all countries. The impacts here could be wide ranging from priority power to planning. Meanwhile it further underlines the value, barriers to entry and criticality of the DC sector as a whole.”
Rajesh Sennik, Partner, KPMG UK
“Data centres have the potential to be an economic force for good. Our analysis indicates that every £1 spent on operating data centres contributes £2 to the wider economy. However, there are many challenges that need to be addressed for this trend to continue, such as the lack of power, high build cost, and too few skilled workers to operate these facilities.
“We also see the hyperscalers following a ‘Nordics first’ strategy in terms of where they host their AI data centres. This could end up being a problem for the UK market if businesses choose to develop their AI models outside of the UK: if the large AI data centres flock to the Nordics, they may also take with them digital talent and investment, putting our home-grown AI organisations and the economy at a disadvantage.”
Dan Smale, Senior Service Owner, Fasthosts ProActive
“As data centres help to improve the UK’s digital infrastructure, they stand to be a key factor in boosting the economy going forward. By building a strong infrastructure presence, the UK becomes a far more enticing prospect for larger businesses looking to establish new operational hubs – bringing influxes of cash with them. Amazon Web Services has recently announced its plans to invest £8 billion over the next five years into UK data centre infrastructure, showing how much the large industry players believe in the UK’s digital potential.
“The tech industry in particular is one that needs these advancements to operate at peak efficiency thanks to the vast amounts of data being transferred and computing power they require, and so these data centres are needed if the UK wants to cement itself as a leader in the digital space.
“The advent of AI has also massively impacted the need for data centres as training language models and delivering AI requires enormous amounts of computing power and data storage, and with so many businesses incorporating technology into their processes and AI startups cropping up constantly, new data centres are needed to meet the exponential rise in its adoption. Without modern, efficient data centres and networking fabric, the UK will fall behind, and the goal of being an AI infrastructure powerhouse will fade into the distance.
“When it comes to the environmental and societal impacts of data centres, the industry has been a hub of innovation in the field of sustainability. Renewable energy plays a large part in green data centres, for example – using solar panels to cover the expansive roofs of the buildings like we have with our own to generate mass amounts of power.
“In fact our data centres run solely on renewable energy and sustainable biofuel. Excess heat from data centres have also been used to heat everything from homes to swimming pools, turning what would be wasted energy into something that can massively benefit the surrounding communities. This heat has also been used to generate more power in turn, making these centres generators in their own right.
“As much as the UK needs data centres to secure its digital future, building them can sometimes be a hard sell for those who live nearby, which is why new data centres are built with sustainability in mind and try to offer as many societal benefits as they can.”
Alex Sharp, Chief Projects Officer, Data Centres, Nscale
“The UK’s decision to classify data centres as critical infrastructure highlights their quiet but profound role in shaping modern life. These vast, unseen engines power the digital services we rely on daily, from AI innovations to the cloud-based foundations of commerce. As they expand, data centres not only address the pressing demands of a digital economy but also bring considerable economic benefits, particularly around job creation.
Yet, as their footprint grows, so too does the urgency to balance their immense energy demands with a world increasingly strained by climate imperatives. By leveraging advanced energy optimisation strategies and efficient design, the UK can make its valuable contribution to the global effort, helping to build data centres that serve both progress and the planet.”
Richard Clifford, Director of Solutions, Keysource
“The UK’s combination of academic excellence, government support and a thriving tech ecosystem positions it as an ideal location for AI deployment. If plans materialise, the proliferation of data centres to support AI infrastructure will significantly boost the UK’s economy, creating a surge in high-skilled jobs and fostering a new generation of tech talent. This growth extends beyond the tech sector, as AI-driven efficiencies ripple across industries, enhancing productivity and competitiveness on a national scale.
“Modern data centres are also pivoting towards sustainability, transforming from energy consumers to community assets. Innovative heat reuse schemes, such as those seen in Exmouth and Manchester, demonstrate how British data centres can provide free heat to local amenities, supporting community services while reducing carbon footprints. This approach not only cuts operational costs for public facilities but also contributes to the UK’s decarbonisation goals.
“As demand for AI infrastructure grows, the focus is on designing and deploying data centres that maximise energy efficiency, reduce environmental impact and support local communities through innovative uses of waste heat and sustainable practices. The UK has the opportunity to lead in developing a symbiotic relationship between technology and sustainability. By strategically locating data centres and integrating them into district heating networks, we can create a model of technological advancement that directly benefits communities and the environment.
“Forward thinking will position the UK not just as a tech leader, but as a pioneer in sustainable, community-centric data centre development.”
Cathal Griffin, CRO, Asanti Data Centres
“The designation of the UK as a hub for data centres (DCs) powering AI infrastructure brings both opportunities and challenges, particularly in terms of its socio-economic and environmental impact.
“With DCs now set to be classified as critical national infrastructure, joining emergency services, finance and healthcare systems, and energy and water supplies and the Government labelling them as “the engines of modern life”, it’s clear that they are now critical to our everyday life. With increasing cyber-attacks, power outages, and environmental risks, ensuring that DCs are well-protected is both timely and essential.
“From an economic perspective, this could present a major boost. Beyond the direct business benefits, there’s also the potential for DCs to contribute to local communities This means that, strategically managed, DCs could contribute to both economic growth and community resilience.
“However, there are some important considerations too. The biggest hurdle we face is how to power data centres. Upgrading the national grid should be a priority to expedite connections to green energy sources. The current wait time for connection stands at around four years, which not only hampers the development of data centres but also prevents other sectors like the NHS from benefiting from green power.
“In addition to national grid upgrades, another issue is the bureaucratic red tape surrounding the use of private wires for green energy. The current regulations are not only restrictive but carry severe penalties, making it a highly prohibitive process. Simplifying these regulations could help unlock significant potential for sustainable energy use in the UK’s data infrastructure.
“While the government has hinted at greenbelt reform, the UK still has plenty of brownfield and decommissioned industrial sites, such as the former nuclear power station at Dounreay in Scotland, which can be utilised before considering expansion into protected areas.
“While the designation of the UK as a region for data centres could provide substantial economic benefits and reinforce the country’s role in the tech ecosystem, the high cost of energy, along with the complex regulatory environment, may limit its competitiveness compared to regions like the Nordics. Addressing these issues could make the UK a far more attractive destination for data centre investments.”
Ben Pritchard, CEO, AVK
“There is no market at the moment that shows as much growth as the DC market with such a wide range of users of data. Typically, the UK and European market follows the US market and trends around 3 years behind. We see already 1GW campuses in the UK being announced.
“We look at the investors coming into the market and deals that are happening the impact on GDP is huge. Even the largest investors are looking at how they would facilitate GW campuses. Government involvement and support is at the heart of getting ahead amongst other areas.
“We have seen embargoes dropped in Amsterdam just to jump onto the AI wagon. There are not many moments in history that give opportunity to lead markets in such away. A consistent approach from the UK would be huge for the economy.
Considerations must be given around power and sustainability.
“UK is already ahead of some areas in Europe with the successful deployment of peaking plants, however as we move towards net zero targets and look to introduce more renewables there needs to be huge investment into national infrastructure to have flexible power assets into the grid.
“This is a huge undertaking and could be fast tracked with the involvement of DC’s building huge schemes that have dispatchable power to contribute to national infrastructure. Any introduction of legislation needs to support DC growth and entrepreneurs. DC is a fast paced market and typical legislation brings red tape that could cause issues on speed to market.”
Aleksei Gaidov, Director, Uniwide Formations
If the UK becomes a hub for data centres supporting AI infrastructure, the positive effects would be significant not only for the broader economy but particularly for small and medium-sized businesses.
Access to large-scale local data processing centres would be a game-changer. Many small and medium-sized enterprises (SMEs) currently cannot afford to use advanced AI tools and data analytics. With these data centres in the UK, costs would likely decrease, making it easier for smaller companies to use the technology that they need to improve productivity and offer better services to their customers.
Another key benefit for SMEs is data protection. UK-based data centres will simplify compliance with regulations such as GDPR, which can be challenging when dealing with international cloud providers. Keeping data within UK borders would mean fewer legal limitations and a more transparent framework for protecting customer data.
On the operational side, faster and more reliable cloud services would directly benefit businesses in sectors such as retail, finance, and technology. Local data centres reduce latency, which can significantly improve the performance of any company relying on cloud-based services for day-to-day functions.
Finally, the development of data centres would create new opportunities for SMEs involved in services such as IT support, cybersecurity, and renewable energy. The demand for these supporting industries would grow, allowing small businesses to contribute to and benefit from this emerging sector.
