A Gulf Trade Agreement could accelerate UK data centre development
A newly inked trade agreement between the UK and Gulf region offers tantalizing potential for collaboration as the race to build data centres heats up. Data centres, like Amazon warehouses before them, are simultaneously springing up everywhere, vital to current consumer and business trends, and wildly unpopular with the public. But despite these objections, the [...]
The recently signed UK-Gulf Free Trade Agreement holds promising implications for the expansion of data centres in the United Kingdom. As the global demand for data centres surges, driven by the increasing reliance on AI and digital infrastructure, countries are increasingly vying to establish themselves as leaders in this sector. The new trade deal is expected to stimulate cross-border investment in digital infrastructure, with potential benefits for both the UK and the Gulf region.
The agreement notably focuses on facilitating cross-border data flows and prohibiting unjustified data-localization requirements. This provision is particularly significant for the data centre industry, as it allows for more seamless data storage between the UK and Gulf Cooperation Council (GCC) countries, which include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. The GCC, being a key player in data centre development, is heavily investing in these facilities to support their AI integration plans.
Saudi Arabia, the UAE, and Qatar currently possess a combined data centre capacity estimated at over 2GW as of 2025, with Saudi Arabia leading the charge, having seen a more than 50% annual growth rate in its capacity since 2025. In contrast, the UK's data centre capacity stands at approximately 2GW. This significant disparity presents an opportunity for UK companies to capitalize on the growing demand for data centre development, leveraging the advantages offered by the trade agreement.
Despite the UK's robust data centre market, with London alone boasting over 5GW of total data centre capacity, the industry faces challenges such as high energy costs, limited land availability, and planning delays due to local opposition. In contrast, the GCC nations benefit from abundant cheap energy, abundant capital, and streamlined governance, enabling faster project implementation.
Moreover, the UK's financial technology companies could potentially extend their services to the Gulf market using combined UK and GCC computing infrastructure, while Saudi AI businesses could utilize British software and professional services to expand internationally.
Written by urgent.news from City AM's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
