\n<\/p>\n
High energy costs, drawn-out planning processes and an often combative antitrust regulator have not made the UK the world\u2019s most popular destination for tech companies looking to build out the vast new data centres needed to power artificial intelligence. <\/p>\n
Nonetheless, this week Big Tech groups including Microsoft, Google and Nvidia lined up to make multibillion-dollar pledges to build new AI infrastructure across the UK, timed to coincide with US President Donald Trump\u2019s state visit. <\/p>\n
US tech executives such as Nvidia chief Jensen Huang credited the spending splurge on British Prime Minister Sir Keir Starmer having \u201cinternalised the importance of building infrastructure here in the UK\u201d. <\/p>\n
\u201cIt was his urgent request that we dedicate resources to the UK to help build AI infrastructure,\u201d Huang said.<\/p>\n
He added that plans by cloud computing start-ups Nscale and CoreWeave to install 120,000 of Nvidia\u2019s AI chips across the UK as part of deals with Microsoft and OpenAI were a \u201cvery good start\u201d. Nvidia is also investing \u00a3500mn in London-based Nscale to help the company, which launched as an AI cloud specialist just last year, scale up its operations. <\/p>\n
Yet this week\u2019s agreements leave unresolved points of tension with the Trump administration over the UK\u2019s tech regulation, particularly its digital services taxes. <\/p>\n
No concessions had been made by Starmer and his colleagues to pressure from Washington to scrap the flat-rate 2 per cent digital tax, people close to the government said. The tax hits tech groups including Alphabet, Meta and Amazon and discriminates against the US, Trump has argued. <\/p>\n
Technology secretary Liz Kendall told the BBC on Wednesday that a change to the levy \u201cwasn\u2019t included in this partnership at all\u201d. However, she stopped short of confirming that the tax would remain in place in the November budget. <\/p>\n
Critics of the spending pledges say Britain is opening up a leading IT market to American tech companies for very little in return. <\/p>\n
\u201cA lot of the deal announced yesterday was mutton dressed as lamb,\u201d said Nick Clegg, Meta\u2019s former policy chief and former deputy prime minister, describing the UK as a \u201cvassal state technologically\u201d. <\/p>\n
\u201cThese companies need to do this anyway\u2009.\u2009.\u2009.\u2009It\u2019s all one-way traffic,\u201d Clegg added. <\/p>\n
\u201cGenerally, the UK has been seen as being more friendly to these companies and that is being rewarded,\u201d said Richard Clode, a tech portfolio manager at Janus Henderson.<\/p>\n
However Brad Smith, Microsoft president, said Britain had become more welcoming to US investors since the company\u2019s bruising tussle with the UK\u2019s Competition and Markets Authority over its $75bn acquisition of Activision Blizzard, which closed after a lengthy antitrust review in 2023.<\/p>\n
\u201cThe climate in London today is so much more hospitable to investment than it was a few years ago,\u201d said Smith. \u201cFor sustained long-term growth of the AI sector in the UK and the economy as a whole, the agenda the government is pushing around permitting and electricity growth are all indispensable.\u201d <\/p>\n
Microsoft said it was making its largest investment in the country \u2014 but $15bn over four years remains a fraction of the $120bn the company plans to spend globally over the next four quarters alone.<\/p>\n
And notwithstanding the government\u2019s drive to speed up planning approvals and access to energy through its AI Growth Zones programme, the obstacles to building large data centres in the UK remain formidable. <\/p>\n
When consultancy LCP Delta ranked the top six most attractive destinations for data centres internationally, the UK did not make the cut, losing out to cities or states in the US, Singapore, India, Malaysia and\u00a0Japan.\u00a0<\/p>\n
In the UK, electricity costs can run to as much as three times what is available in other parts of the world. <\/p>\n
Most data centres will be paying 18-28 pence per kilowatt-hour in the UK depending on how they buy their energy, according to Dina Darshini, head of commercial and industrial at LCP Delta, compared to around 8 pence per kilowatt-hour in the Nordics or the US state of Virginia.<\/p>\n
Delays in connecting to the grid also present a substantial bottleneck. According to estimates by the International Energy Agency, UK developers typically wait five to seven years to connect to the grid, compared with one to three years in the US. <\/p>\n
But Darshini said the UK remains attractive nonetheless, due to factors such as strong demand from financial hubs, resilient infrastructure, supportive policies and availability of skilled labour. <\/p>\n
Recommended<\/p>\n
While LCP Delta placed the UK below many international peers, it ranked London as the most attractive destination for data centre investment in Europe, based on factors including the regulatory environment,\u00a0demand for their services and financing availability.\u00a0\u00a0<\/p>\n
Luisa Mostarda, senior energy consultant in the energy team at estate agent Savills, said data centre owners in the UK can reduce their electricity costs by striking long-term power purchase agreements at a fixed price, or private wire arrangements which can mean lower grid fees.\u00a0<\/p>\n
\u201cPrivate wire arrangements in the UK are definitely some of the easiest compared to other countries,\u201d she said. The UK\u2019s overall stability also makes it attractive despite grid delays, she added.<\/p>\n
Smith at Microsoft said it \u201cgot a head start\u201d before making its new $15bn AI infrastructure announcement this week by putting energy contracts into place several years ago. <\/p>\n
The Starmer government has been \u201cclear from day one\u201d that planning and energy bottlenecks were \u201ca challenge they are prepared to take on\u201d, said Saul Klein, a London-based tech investor who has also advised several UK governments. <\/p>\n
\u201cEvery economy needs and wants incredible infrastructure for AI compute. That\u2019s self-evident,\u201d Klein said. <\/p>\n
Additional reporting by Kieran Smith in Cambridge and Stephen Morris in San Francisco<\/em> <\/p>\n","protected":false},"excerpt":{"rendered":" High energy costs, drawn-out planning processes and an often combative antitrust regulator have not made the UK the world\u2019s most popular destination for tech companies looking to build out the vast new data centres needed to power artificial intelligence. Nonetheless, this week Big Tech groups including Microsoft, Google and Nvidia lined up to make multibillion-dollar<\/p>\n","protected":false},"author":1,"featured_media":22037,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[835,634,1860,427,1580,2362,812],"class_list":{"0":"post-22036","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-answer","9":"tag-call","10":"tag-groups","11":"tag-infrastructure","12":"tag-spending","13":"tag-starmers","14":"tag-tech"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/22036","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=22036"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/22036\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/22037"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=22036"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=22036"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=22036"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}