UK Government-Microsoft AI Focus Could Drive £550B GDP Boost by 2035

Key Takeaways

• Microsoft predicts that AI and cloud technologies could contribute an additional £550 billion to the U.K. economy by 2035.
• However, several obstacles currently stand in the way.
• The country’s digital infrastructure is underdeveloped to support AI growth.

Recent research supported by Microsoft found that AI and cloud technologies could create a $550 billion opportunity for the U.K. economy over the next decade.

However, the firm has cautioned that three bottlenecks could hold the U.K. back from achieving its full potential.

A £550 Billion Opportunity

Microsoft said that to realize the projected half a trillion pounds in GDP growth, it must accelerate the development of cloud infrastructure, boost businesses’ awareness of AI opportunities, and overcome the digital skills gap.

“Investing more in infrastructure, cloud, AI, and digital skills could help overcome these obstacles,” the Microsoft report notes.

The report  projects that the societal return on investment in digital technologies and skills could be as high as five to one over the next decade. 

For its part, the firm has committed to investing £2.5 billion over the next three years with a plan to more than double its data center footprint and equip more than a million workers with digital skills. 

It has also signed a 5-year deal  with the government to expand public sector access to its cloud and AI services. 

U.K. Data Centers Lag Behind

Despite being the world’s sixth-largest economy with a thriving technology sector, the U.K. ranks ninth in CloudZero’s global cloud index , behind European neighbors like France and the Netherlands, due to infrastructure limitations.

While the country is home to 514 data centers, these tend to be much smaller than those found in other regions, and building new ones can be challenging.

Google recently warned that the U.K. “risks being left behind” if it doesn’t ramp up its data center capacity. It called for the government to champion pro-innovation policies and invest in new public-private infrastructure-building approaches.

Infrastructure Building Challenges

Although industry and the government recognize the U.K.’s need for cloud infrastructure, any new development must overcome the high cost and limited availability of land, strict planning regulations, and challenges securing large power supplies.

Since coming to power in the summer, the Labour government proactively pushed to accelerate data center construction. Deputy Prime Minister Angela Rayner resurrected two proposals  to build data centers within protected areas of the countryside that local authorities had previously dismissed. 

Proposed reforms  to the National Planning Policy Framework would designate data centers as critical national infrastructure, requiring local councils to identify prospective sites and making it harder for them to block construction. 

Even if the U.K. does push ahead with new data centers, it still faces the challenge of powering them. As reported  by the Telegraph, fourteen data center projects are currently on hold until extra capacity can be added to the national grid.

About the Author

James Morales

Although his background is in crypto and FinTech news, these days, James likes to roam across CCN’s editorial breadth, focusing mostly on digital technology. Having always been fascinated by the latest innovations, he uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.

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