theFreesheet is the official media partner for Manchester Edge & Digital Infrastructure Summit, to be held on April 2nd, 2026.
With power grids in the South East reaching their limits, the centre of gravity for the UK’s digital economy is shifting toward a new generation of high-performance hubs in the North.
The era of unconstrained digital growth in London and the M25 corridor is over. For decades, it served as the default home for the UK’s data infrastructure, but a combination of land scarcity and severe power constraints is forcing a redirection of capital.
According to 2024 analysis from the Office for National Statistics (ONS), annual market-sector investment in digital infrastructure — covering areas such as broadband, data networks, and related ICT — reached £9.2 billion in 2022, the highest level since the height of the telecoms bubble in 2000.
While London remains a global heavyweight, a growing share of this capital is now being deployed beyond the M25. As server energy efficiency gains hit a stubborn plateau — meaning operators can no longer rely on each new generation of hardware to deliver the same massive energy savings as before — the industry is entering a “build-out moment” in which geography is increasingly dictated by power access rather than proximity to the City. For developers, the North of England is emerging as the primary growth zone for power-hungry AI workloads that the South can no longer accommodate seamlessly.
The saturation of the South
London remains the anchor of the European “FLAP” markets (Frankfurt, London, Amsterdam, and Paris), but its infrastructure is a victim of its own success. In parts of West London, the grid has reached its limits. A report from the London Assembly’s Planning and Regeneration Committee warned that the rapid expansion of data centres has “stretched the grid to its limits,” particularly regarding West London’s electricity capacity.
The stakes are high: the GLA has noted that some new developments were previously quoted wait times of up to 2037 for a grid connection. While short-term “fixes” unblocked roughly 12,000 homes by early 2025, the underlying reality is that a typical AI-grade data centre can require concentrated power on the scale of tens of thousands of homes, making it increasingly difficult for the South East to balance digital growth with housing targets.
The Northern solution: ‘AI Growth Zones’
The North West is positioning itself to absorb this displaced demand by leveraging its industrial heritage. A 2024 white paper from Kao Data, The North West: The UK’s Next AI Growth Zone, highlights the region’s abundance of brownfield land and cooler ambient temperatures as major advantages for high-performance computing.
The report introduces the concept of “AI Growth Zones” (AIGZs) — regional clusters designed to decentralise AI growth and attract large-scale AI workloads. These zones, centred around Greater Manchester, benefit from significant private-sector investment, including a £350 million commitment from Kao Data for an industrial-scale, AI-ready facility in Stockport.
Specific projects are already moving from planning to reality. In early 2025, Salford City Council unanimously approved a £250 million data centre at the Halo West site. The development, a partnership between Peel Waters and Digital Land & Development, is treated as critical infrastructure in local planning and aims to integrate heat-reclaim technology for future district heating.
Productivity and the digital backbone
The relocation of infrastructure is a strategic attempt to bridge the UK’s regional productivity gap. ONS data suggests that investment in “Data processing, hosting and related activities” — which include the AI and cloud industries — has followed a steady upward trend over the past decade.
By establishing these “digital factories” in the North, the UK aims to foster a high-productivity ecosystem outside the South East. Manchester was recently named the most “AI-ready” city in the UK outside London in a 2024 report by SAS, supported by a talent pool in which over 60% of university graduates remain in the Greater Manchester region. This regional shift is further supported by proximity to the North Sea coast, where major offshore wind projects provide long-term access to renewable energy, a luxury in the congested South.
Resilience as a regional asset
As the industry moves toward 2027, the “North-South divide” is being replaced by a model of regional resilience. While London remains the gateway for global subsea cables, the North offers the physical scale required for massive GPU clusters. The challenge for the coming year will be ensuring that local skills and fibre connectivity keep pace with the physical build-out—a transition that requires deep collaboration between local authorities and private investors.
Local policymakers, operators, and investors are now wrestling with how to turn this influx of capital into a lasting regional advantage.
- These challenges — from Critical National Infrastructure obligations to net-zero AI infrastructure — will be among the many topics discussed by the industry’s most influential business executives at the upcoming Manchester Edge & Digital Infrastructure Summit, to be held on Thursday, April 2nd, 09:30 – 17:00 at No.1 Circle Square, Manchester. Click here to register.
