Data centres: The UK’s economic powerhouse?

A new report claims that, given the right investment climate and policy support, the UK data centre sector could grow tenfold by 2035.

TechUK’s report found that the sector could boost the economy by £44bn while creating over 40,000 jobs.

The report also outlined how surging demand for digital services, fuelled by tech trends such as AI, is reshaping the sector into a potential economic driving force.

Currently, UK data centres contribute £4.7bn in Gross Value Added (GVA), generate £540m in tax revenue and support over 40,000 jobs.

However, with projected growth rates of up to 20 per cent annually, the sector could be worth up to £44bn by 2035. That could generate as much as £9.7bn in additional tax revenue, according to the report.

UK data centre growth

The report recommended several key areas policymakers could support to drive growth.

The report recommended that the country invest heavily in grid connections, easier access to renewable energy, and investments in on-site solutions such as modular reactors and geothermal to support the energy-intensive nature of data centres.

TechUK also outlined the need for a national policy for data centres and streamlined planning processes.

This would include faster approval timelines and more consistent decision-making to encourage rapid development.

With demand rising, the report also outlined the need for skilled talent, suggesting measures such as enhancing the apprenticeship levy and promoting industry-specific career paths.

Lastly, TechUK outlined the need for government collaboration, suggesting the requirement of cohesive support for collective growth.

Matthew Evans, TechUK’s director for markets and chief operations officer, said: “Data centres are the backbone of the digital economy; without them our transport, energy and wider economy couldn’t function.”

The report followed the UK government’s recent announcement that data centres will now be branded as Critical National Infrastructure.

He also added: “With the right policy support and collaboration between industry and government, the sector is poised to drive further innovation and enable digital transformation across all sectors of the economy across the country.”

Its technology secretary, Peter Kyle, also said: “As these findings show, if government and industry work together to tackle the challenges and harness the opportunities the sector offers, we can create thousands of jobs and drive prosperity across all corners of the country. We have already seen the sector respond with over £25 billion of private investment committed in recent months”.