National resilience has always depended on critical infrastructure. In the 19th century, it was coal and railways. In today’s artificial intelligence (AI) world, that will be determined by the infrastructure that powers AI.
National resilience will look to the power, connectivity and data centres needed to support the development and deployment of AI, which will underpin the entire UK economy.
The UK possesses world-class scientific talent, leading academic research and the ambition to compete on the global AI stage. However, our long-term productivity, regional growth and competitiveness will not be decided by just ambition. Our ability to build, power, finance and de-risk the digital infrastructure underpinning AI’s rise will shape our future.
In 2024, the digital economy and its supporting infrastructure underpinned more than 13 per cent of the UK economy, contributing £286bn in GVA (gross value added). Globally, data centre compute capacity is projected to nearly double from 75GW today to 140GW by 2030, driven in large part by the rapid growth of AI.
Oliver Wyman research shows scaling these digital capabilities could add up to $20trn to global GDP by 2030 and save 300 billion work hours annually. Yet digital growth for the UK cannot be created by strategy papers or policy summits alone. It lies in how we support global financing and the risk transfer required for infrastructure to be built globally.
Accelerating AI adoption requires far greater computing power, which will drive demand for data centres, high-voltage grid connections and digital connectivity. Yet delivery remains constrained by long waits for grid connections, planning barriers and pressure on global supply chains.
The UK risks developing an ‘infrastructure execution gap’: a widening divide between its ambition to lead in AI and its ability to build the physical foundations needed to deliver it.
Research by Oliver Wyman and UK Finance revealed that while over 90 per cent of UK financial services firms have deployed predictive AI, nearly 70 per cent remain trapped in the pilot stage for generative AI.
Factors such as workforce skills, regulatory governance, data readiness and organisational capability are critical to scaling AI. However, without sufficient data-centre and energy capacity, these digital initiatives will remain stuck in sandbox pilots rather than driving productivity.
For the largest projects, delays to power connections and operations on the largest projects can create financial exposure of billions, including risks that may be difficult to insure. When there are significant ongoing capital requirements and complex risk profiles, investors will become cautious, increasing the likelihood that infrastructure projects and pipelines could slow or halt altogether.
If the UK struggles to make these digital infrastructure assets attractive for investors then global capital, new digital projects and long-term investors will simply look elsewhere. This will weaken the UK’s productivity and erode our global competitiveness. To overcome this, we must leverage what other global competitors and markets lack: our world-leading financial and professional services ecosystem.
Growing demand for resilience is driving discussion around domestic investments within the AI industry. In the UK, this plays to strengths in finance, insurance and risk expertise. As Oliver Wyman and CBI research highlights, the UK is well positioned in its AI assurance and standards market. This is important.
The UK government has noted that the UK’s AI assurance market could grow to £18.8bn by 2035.
Financial and professional services should be integral to the UK’s technology strategy. London’s capital markets, insurance and reinsurance sector and professional services ecosystem can help turn complex infrastructure projects into investable propositions.
Better data, analytics and risk modelling can give developers, lenders and investors greater visibility over the operational, construction and energy-related challenges these projects face. Greater transparency reduces uncertainty, helping organisations make investment decisions with more confidence. Insurance, reinsurance and specialist capital providers can help distribute risk, making projects more resilient and easier to finance.
This in turn helps unlock capital. Pension funds and other institutional investors are often attracted to long-term infrastructure opportunities but can be deterred by uncertainty around construction, operational and revenue risks. By improving how those risks are measured and managed, the UK can create the confidence needed to attract greater levels of private investment into critical digital infrastructure.
Britain’s financial strength is not separate from its technology strategy; it can be one of the mechanisms through which that strategy is financed and delivered.
Unlocking private capital at scale requires active collaboration between government, industry and financial specialists. The government should structure its policy approach around three priorities – building faster, creating certainty and mobilising capital – while ensuring that digital expansion remains sustainable and aligned with the energy needs of local communities, households and industries.
Building faster requires fast-track planning pathways for digital projects and prioritising grid connections for data centres. To do this, we need an accountable, cross-sector government delivery unit tasked with clearing practical bottlenecks and tracking against hard deadlines to ensure
that policy vision translates into physical delivery.
Creating certainty requires delivering proportionate, predictable and internationally aligned regulation. Clear, consistent regulation will eliminate market ambiguity and provide domestic and international investors with the long-term confidence needed to make multi-million capital commitments.
Finally, to mobilise capital, the government should work with the private sector to create standard ways to share risk and investment partnership with government.
By removing barriers to private capital, we can reduce uncertainty around digital infrastructure projects, making them more attractive to long-term investors. Countries that establish the best ecosystem – where power, compute and connectivity can be harnessed – will become home to the most data centres globally.
If we treat our financial and professional services ecosystem as part of our AI infrastructure strategy, rather than as a separate sector of the economy, the UK has an opportunity to turn one of its historic strengths into a competitive advantage for the AI age.
This article first appeared in Spotlight on Economic Growth: New Paths to Prosperity
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