Booming industry: analysing UK data centre growth

June 2025  |  FEATURE | SECTOR ANALYSIS

Financier Worldwide Magazine

June 2025 Issue

The data centre industry is a global behemoth with huge market potential. It is also an industry on the cusp of a transformative era driven by the rapid advancement of artificial intelligence (AI) technologies.

While generally not making the front pages, data centres serve a critical role and are increasingly classed as national infrastructure. No longer small rooms housed on-site by business users, data centres have increasingly become extensive, centralised facilities managed by multinational operators.

Testifying to this criticality is analysis by Statista, which states that revenue in the global data centre market is projected to reach $452.53bn in 2025. In addition, revenue is expected to show an annual growth rate of 8.37 percent, resulting in a market volume of $624.07bn by 2029.

“Data centres play a crucial role in powering the economy, providing the IT infrastructure needed to run applications, manage data and deliver online services efficiently,” says Michael Hunter, head of commercial at Apatura. “The growing demand for cloud computing is a key driver of expansion in this sector, with major providers like AWS, Google and Microsoft requiring large-scale data centre capacity to support their expanding services which organisations and individuals are reliant on.

“Data usage has surged over the past 15 years, increasing 100-fold in that time,” he continues. “More data has been created in the last three years alone than in all of human history. The rise of AI has only accelerated this trend, requiring significantly more computational power than traditional workloads. This is driving the development of high-capacity data centres equipped with specialised graphics processing units (GPUs) and advanced cooling systems to meet growing demands.”

As noted by Srikumar Ramanathan, chief solutions officer at Mphasis, demand is primarily being driven by the likes of Google, OpenAI, Anthropic and Meta. “These companies are at the forefront of large language model development,” he says. “As industry adoption accelerates – from pilot programmes to full-scale production – the need for data centre capacity will continue to grow.”

A UK perspective

In the UK, demand for suitably equipped data centres has increased in recent years, as has the understanding of the significant economic benefits that accompany an expansion of this ilk.

According to techUK’s 2025 report ‘How data centres can boost UK economic growth’, if the UK can increase its data centre capacity from 10 to 15 percent a year, the result will be: (i) £44bn in additional gross value added between 2025-35; (ii) 40,200 additional jobs directly employed in data centre operational roles; (iii) 18,200 additional jobs directly employed in data centre construction roles over the period 2025-35; and (iv) £9.7bn in additional tax revenue generated by the industry over the period 2025-35.

“In the UK, demand for data centres remains high,” adds Mr Hunter. “The greater London area has historically been the primary focal point, with its concentration of financial institutions, technology firms and data-driven industries. Recently, there have been several government initiatives, such as the designation of data centres as critical national infrastructure and the introduction of AI growth zones, which are further strengthening the industry’s significance and attracting continued investment.”

The UK government supports the growth of the data centre sector by offering incentives for construction in certain areas, part of its efforts to boost the digital economy. In addition, modular data centres are gaining in popularity, given their flexibility and swift deployment capabilities.

For the moment, however, power availability remains a bottleneck. “Areas such as West London, where data centres are clustered, face significant challenges in securing large-scale, scalable power connections before 2030,” explains Mr Hunter. “In response to this, along with less latency sensitive AI workloads, operators and hyperscalers are exploring alternative locations, such as the northeast of England and Scotland, where land prices are cheaper and the weather is cooler, which helps operationally cool a heat-intensive industry.”

Concentrated spending

The explosion in demand for data centres has attracted and will continue to attract the attention of investors of all types. The US will remain a key hub, but others, including the UK, will see concentrated spending.

“In the coming years, data centre investment levels are expected to remain robust,” affirms Mr Ramanathan. “A significant investment in the expansion of existing data centres and the construction of new facilities is planned. The focus will also be on upgrading technology within data centres, including specialised hardware such as GPUs, tensor processing units, and more efficient servers and network infrastructure to handle higher data throughput.”

Recent investments in the UK include Blackstone’s $13bn ‘hyperscale’ investment in the northeast of England – a 1.2GW, 540,000-square-metre data centre project that is on a par with similar, large-scale deployments across the globe.

“Investors are focusing on places that offer cost effective renewable energy sources like energy options,” adds Mr Hunter. “Investment strategies will continue to evolve due to different requirements that AI deployment needs to consider, including copyright and data sovereignty regulations leading to large scale country-specific investments, as well as more traditional cloud expansions.

“In Europe, Nordic regions are popular for investments because of their economical hydroelectric power sources,” he concludes. “However, recent UK government initiatives focusing on retaining AI model training within the nation could lead to further, significant investment prospects in the UK.”

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