Microsoft has announced a $30bn (£22bn) investment in the UK’s artificial intelligence sector, the largest outside the United States, as part of a sweeping new agreement with Washington designed to cement Britain’s place in the global AI race and also should significantly boost Britain’s economy in the next few years.
The investment, revealed by chief executive Satya Nadella, forms a major share of a £31bn “Tech Prosperity Deal” signed between the UK government and US tech giants during Donald Trump’s second state visit to Britain.
Supercomputer in Essex and Data Centre Push
The deal includes plans for new data centres and the creation of a powerful supercomputer in Loughton, Essex, with Microsoft joining a project already announced in January.
Nadella told the BBC he believed AI could accelerate UK growth far faster than many predict. “Our hope is not 10 years but maybe five,” he said. “Whenever anyone gets excited about AI, I want to see it ultimately in economic growth and GDP growth.”
Google, Nvidia and other US companies have also pledged billions of pounds to UK-based infrastructure and research. Nvidia said it would work with partners to invest up to £11bn, in what it called the largest AI infrastructure rollout in the country’s history.
Starmer Hails ‘Generational Step Change’
Prime Minister Sir Keir Starmer called the deal “a generational step change in our relationship with the US,” adding it would create thousands of highly skilled jobs and “ensure this partnership benefits every corner of the United Kingdom”.
The government has designated north-east England as a new “AI growth zone”, with the potential for more than 5,000 jobs and billions in private investment.
Boon or Bubble?
The announcements come as Britain grapples with sluggish economic growth. Nadella compared AI’s potential impact to the personal computer boom of the 1990s, but warned against hype. “All tech things are about booms and busts and bubbles,” he said, adding that AI would still deliver “new products, new systems and new infrastructure”.
Critics worry the UK risks becoming overly dependent on foreign technology. Campaign group Foxglove warned taxpayers could “end up footing the bill for the colossal amounts of power the giants need”. Nadella acknowledged AI’s energy consumption was “very high” but argued data centre expansion would also “modernise the grid”.
No Concessions on Tax or Copyright
Technology Secretary Liz Kendall said the deal did not include concessions on the UK’s Digital Services Tax, a 2% levy on tech giants that raises about £800m annually. Nor did it resolve copyright disputes over how AI firms use creative content, an issue that has angered artists and publishers.
“This is an issue that’s really important, we’re working on it at the moment,” Kendall told BBC Radio 4, stressing the government was seeking a balanced solution.
Global Stakes
For the US, the partnership fits with White House ambitions to export American AI capacity to allies. Nadella described the deal as defining “the next phase of globalisation”, insisting access to foreign technology strengthened rather than weakened Britain’s digital sovereignty.
Yet the backdrop remains uncertain. The Conservative Party has highlighted recent cancellations of UK expansion plans by other multinationals, including pharmaceutical giant Merck.
Thinktanks also warn Britain must address bottlenecks in planning and clean energy. Dr Keegan McBride of the Tony Blair Institute said: “This is a breakthrough moment, but Britain needs to reform planning rules, accelerate clean energy projects and build the digital infrastructure for AI growth.”
Tech Leaders in London
Nadella will join Trump and other US tech leaders, including OpenAI’s Sam Altman and Nvidia’s Jensen Huang, at a state banquet this week. Joking about the occasion, he told the BBC he had used Microsoft’s AI tool Copilot to help choose his outfit.
“I was very surprised that there was a very different dress protocol, which I’m really not sure that I’m ready for,” he said.
