US tech giants Microsoft, Google, and Nvidia are scrambling for a share of the UK AI cake as the race for the tech intensifies. When Google disclosed a £5 billion plan to expand its British AI footprint last month, it seemed a remarkable show of faith in the country’s faltering economy. Days later, Nvidia joined, promising to bankroll the UK’s largest AI infrastructure rollout to date. However, the loudest signal yet has come from Microsoft, which has committed £22 billion, roughly $30 billion, to new data centers and AI facilities across Britain. Why has Microsoft joined the scramble for the British market now? The agreement, struck during Donald Trump’s second state visit to Britain, is being trumpeted in Downing Street as proof of a renewed “special relationship” built on chips, servers and algorithms rather than steel or tanks. Prime Minister Sir Keir Starmer, keen to showcase an economic win, said: “The pact is a generational step change in our relationship with the US.” He told the BBC that “the partnership will create skilled jobs, boost wages and ensure this partnership benefits every corner of the UK.” The question puzzling analysts is why such vast sums are being funneled into a country often criticized for underwhelming infrastructure and patchy growth. For Satya Nadella , Microsoft’s chief executive, the answer lies in timing. “Whenever anyone gets excited about AI, I want to see it ultimately in the economic growth and the GDP growth.” Nadella. “It may happen faster, so our hope is not 10 years but maybe five,” Nadella told the BBC. Policymakers in Britain have rested their hope on AI as a potential remedy for the flatlining productivity problem they currently face. The need to construct domestic data centers is also practical as training large language models such as ChatGPT requires huge amounts of computing power. With this in practice, relying on overseas facilities leaves Britain vulnerable. Nvidia’s boss Jensen Huang underscored the point earlier this year when he told Starmer that it was “surprising this is the largest AI ecosystem in the world without its own infrastructure.” Yet he also called Britain’s AI environment a “Goldilocks circumstance”, neither too tightly regulated nor too lax, making it ripe for rapid growth. But the US wants to lead the AI race Rachel Reeves, the Chancellor, formally launched the investment wave by opening a £735 million data center this month, the first tangible product of the pledges. Microsoft will also contribute to a government-backed supercomputer project in Essex, first announced in January, bolstering Britain’s push to become a global hub for AI research. The government says more than 5,000 jobs could be created, particularly in north-east England, which has been designated as a new “AI growth zone.” The region will host OpenAI’s Stargate UK project at Cobalt Park in Northumberland, bringing together Nvidia, chip designer Arm and data center group Nscale. OpenAI’s chief Sam Altman declared Stargate would “help accelerate scientific breakthroughs, improve productivity and drive economic growth.” The facility will sit alongside a £10 billion data center already under construction near Blyth, creating a cluster in an area long scarred by industrial decline. However, questions have been raised about costs and training AI systems generally devours energy Foxglove, a digital rights group, warned Britain could end up “footing the bill for the colossal amounts of power the giants need.” Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free .
