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Microsoft anticipates its new $30 billion investment in the UK’s artificial intelligence sector, its largest outside the United States, will significantly bolster the British economy in the coming years.
This investment is a key component of a broader £31 billion agreement between the UK government and several US tech giants, including Nvidia and Google, aimed at enhancing British-based infrastructure to support AI technology, primarily through the development of data centers.
As part of this initiative, Microsoft will also participate in the creation of a powerful new supercomputer in Loughton, Essex.
In an exclusive interview with the BBC, Microsoft CEO Satya Nadella discussed the potential impact of this technology on economic growth.
“It may happen faster, so our hope is not ten years but maybe five,” Nadella stated, suggesting an accelerated timeline for economic benefits.
He emphasized, “Whenever anyone gets excited about AI, I want to see it ultimately in the economic growth and the GDP growth.”
Prime Minister Sir Keir Starmer hailed the US-UK deal as “a generational step change in our relationship with the US.”
He added that the agreement is “creating highly skilled jobs, putting more money in people’s pockets and ensuring this partnership benefits every corner of the United Kingdom.”
The UK economy has experienced persistent sluggishness in recent months.
Nadella drew parallels between the potential economic impact of AI and the widespread adoption of personal computers in the workplace, which occurred approximately a decade after their initial scaling in the 1990s.
However, concerns are growing about a potential AI bubble. Nadella acknowledged the cyclical nature of technology, stating that “all tech things are about booms and busts and bubbles.” He cautioned against both over-hyping and under-hyping AI, while affirming its potential to generate new products, systems, and infrastructure.
Acknowledging the “very high” energy consumption of AI, Nadella argued that its potential benefits, particularly in healthcare, public services, and business productivity, justify the investment. He added that investing in data centers “effectively” modernizes the power grid, though he did not specify direct financial contributions to the UK’s power supplier, the National Grid.
The campaign group Foxglove has cautioned that the UK could “end up footing the bill for the colossal amounts of power the giants need.”
The supercomputer project in Loughton, Essex, was previously announced by the government in January, with Microsoft now joining as a key partner.
Mr. Nadella’s announcement coincides with Donald Trump’s arrival in the UK for a three-day state visit.
The UK and US have signed a “Tech Prosperity Deal” during the visit, aiming to strengthen collaboration on AI, quantum computing, and nuclear power.
Google has pledged £5 billion for AI research and infrastructure over the next two years.
UK Chancellor Rachel Reeves inaugurated a £735 million data center in Hertfordshire on Tuesday, marking part of the broader investment.
Concerns have been raised that accepting substantial investment from US companies could lead to over-reliance on foreign technology.
In July, Trump articulated his ambition for the US to win the global AI race.
A key strategy outlined was to “export American AI to allies and partners.”
The UK government has entered into several agreements with US technology firms, including an agreement to use OpenAI services in the public sector and a £400 million contract to utilize Google Cloud services within the Ministry of Defence.
Satya Nadella characterized the agreement as defining “the next phase of globalization,” asserting that access to foreign tech services enhances, rather than threatens, digital sovereignty.
Addressing concerns about AI’s impact on jobs, Nadella stated that Microsoft must “change with the changes in technology,” referencing recent staff layoffs despite record sales and profits, which he described as “the hard process of renewal.”
The government has also projected “potential for more than 5,000 jobs and billions in private investment” in north-east England, which has been designated as a new “AI growth zone.”
Last year, the government announced a £10 billion investment into a data center to be built near Blyth, Northumberland.
It has now announced another data center project dubbed Stargate UK from OpenAI, chipmaker Nvidia, semiconductor company Arm and AI infrastructure firm Nscale.
That will be based at Cobalt Park in Northumberland.
OpenAI boss Sam Altman said Stargate UK would “help accelerate scientific breakthroughs, improve productivity, and drive economic growth.”
However the UK version is a fraction of the firm’s US-based Stargate project, which OpenAI launched in January with a commitment to invest $500 billion over the next four years building new AI infrastructure for itself.
So far, reaction to the agreement has been broadly positive, but it is clear that there are many challenges ahead for the UK if it is to fulfil its intended potential.
The Tony Blair Institute described the news as a “breakthrough moment” but added that Britain had some work to do: “reforming planning rules, accelerating the delivery of clean energy projects, and building the necessary digital infrastructure for powering the country’s tech-enabled growth agenda,” said Dr Keegan McBride, the Tony Blair Institute for Global Change’s emerging tech and geopolitics expert.
Matthew Sinclair, UK director of the Computer & Communications Industry Association, hailed the agreement as “a powerful demonstration of the scale of the AI opportunity for the UK economy.”
But the Conservative Party highlighted that other big international companies such as the pharmaceutical giant Merck have recently cancelled or delayed their UK expansion plans.
Satya Nadella spoke to the BBC News in between board meetings, shortly before jumping on a flight to join Donald Trump as he arrives in the UK on a three-day state visit. Nadella will be among other tech leaders, including OpenAI’s Sam Altman and Nvidia’s Jensen Huang, attending the Royal state banquet on Wednesday.
He said he would use Microsoft’s AI tool Copilot to help him decide what to wear.
“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.
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