UK cosies up to big tech with $42 billion data center and AI investment deal

A bevy of tech companies have announced over $40 billion in collective investment in the UK to coincide with the second state visit of President Trump. With announcements of cooperation from Nvidia, OpenAI, Google, Microsoft, and others, the UK is set to build new data centers, as well as AI and energy infrastructure, reports Reuters. The British government hopes that having a lighter approach to AI legislation and planning will allow the country to attract further investment from technology companies that may be deterred by tighter regulations in the EU.

Since coming to power in spring 2024, the UK's Labour government has struggled to balance its progressive policies with a need to drive economic growth in the wake of years of stagnation within the country. Despite improving wages for public sector workers and driving investment into public services, the economy has failed to rally like the government hoped. Encouraging such large-scale investment from so many international companies is a potential way to dig the UK out of the economic hole it's found itself in.

British Prime Minister Keir Starmer hailed the news as both prosperous for the UK and the relationship between the United States and the UK.

"This Tech Prosperity Deal marks a generational step change in our relationship with the US, shaping the futures of millions of people on both sides of the Atlantic, and delivering growth, security and opportunity up and down the country," he said.

"By teaming-up with world-class companies from both the UK and US, we’re laying the foundations for a future where together we are world leaders in the technology of tomorrow, creating highly skilled jobs, putting more money in people’s pockets and ensuring this partnership benefits every corner of the United Kingdom."

Several deals have been announced from various companies, ranging from hundreds of millions of dollars of investment to several billions. Google opened a new data center in Waltham, Lincolnshire, as part of a $6.8 billion investment package that will see it expand its London-based Google DeepMind research center for AI research in science and healthcare. These projects will support over 8,250 jobs and help Google enhance its Maps, Cloud, and search tools in the UK.

OpenAI announced Stargate UK in partnership with Nvidia and UK-based Nscale. Together they're developing several new AI data centers beginning at the site of a former coal power station in Northumberland, north-east England. This is one of the UK's newly designated "AI Growth Zones," which are designed to ease the building of data centers and revitalize under-invested areas of the UK.

Backed by an additional $13.5 billion in investment from financial firm Blackstone, the area already has an established wind power presence, with further plans to develop solar energy and battery storage facilities to reduce the environmental impact of these new developments.

To power the new data centers, OpenAI and Nscale will be importing tens of thousands of graphics cards from Nvidia. OpenAI said that it would "offtake up to 8,000 GPUs in Q1 2026 with the potential to scale to 31,000 GPUs over time."

That's just the start, though. In its announcement, Nvidia claimed it was in talks to provide up to 60,000 Grace Blackwell GPUs to the UK, as well as an additional 120,000 Blackwell GPUs for AI data centers in the UK. Over 20,000 of those will be invested in the new supercomputer Nscale is developing in Essex, with Microsoft now joining the project to provide additional investment.

Microsoft's UK investment could well be the largest. With over $30 billion promised over the next four years, Microsoft pledged at least half of that towards AI infrastructure, and the rest to expanding Microsoft's existing activities in the country, including gaming and Windows services.

There is also a range of investments in the 10s to multiple hundreds of millions of dollars from ARM, Coreweave, ScaleAI, DataVita, TechUK, Pathfinder, Salesforce, and Blackstone, among others. They're driving further investment into quantum computing, medicine, space exploration, digital security, and more.

As if in anticipation of concerns over power and water usage at the range of new data centers, the UK government also announced new UK and U.S. partnerships over the development of nuclear energy. Under the scheme, companies will be able to acquire licenses to build nuclear reactors faster in the UK. It will also facilitate greater research into the development of commercial fusion power.

The balancing act

From a purely economic perspective, it's hard to find fault in all these announcements. Any economy can benefit enormously from tens of billions of dollars of outside investment, and especially when that comes with closer ties to some of the world's most valuable companies, which are all spending big to ensure their own gravy trains keep on rolling.

But it's all a delicate balancing act for the UK government. While the news of AI investment is indeed positive for the country from an economic perspective, whether or not these investments turn into tangible, usable resources for the country and its AI efforts remains to be seen. Regardless of the outcome, this scale of planning is exactly what Nvidia CEO Jensen Huang wants: to build AI infrastructure across the globe.

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