ProductNot yet confirmed elsewhere1 publisher3 min readPublished
Britain's digital infrastructure number tripled by definition, then fell 4 percent
The ONS widened what counts as digital infrastructure to include data centres, hardware and spectrum. The bigger total went backwards in its first year.
The Product Desk
What happened
- The ONS put 2025 UK digital infrastructure investment at £11.2bn, about three times what its official measure had been reporting.
- The headline measure, which counts telecommunications structures only, showed £3.6bn for the same year.
- On the wider definition, investment fell £0.5bn from 2024, a drop of 4.0%.
- Two categories took 84.0% of the 2025 total: other buildings and structures at £5.6bn, software and databases at £3.8bn.
- Hardware reversed a long decline, rising 54.6% to £0.7bn, its highest since 2006.
Why it matters
- constraint For anyone sizing grid or water capacity, the wider total is a worse guide than the narrow one: reclassified software and spectrum permits never apply for a substation connection.
- contradiction Industry is briefing a near-sixfold ramp in data centre spending by 2029 off a £1.75bn base, while the official series that now includes data centres has just gone backwards.
- cost Grant funding tripled and a bit in a year and is the highest share on record, so the taxpayer is buying a growing slice of a total that shrank.
- precedent Publishing and broadcasting were considered and excluded, which makes the boundary of official infrastructure a thing sectors can now argue their way into.
The distance between the two measures is £7.6bn [26], and none of it is a building site. The statisticians say so themselves: they are not identifying investment outside existing capital formation data, and the wider definition reclassifies a greater share of what was already recorded [9]. That is still worth doing, because the old method hunted for structures inside the telecoms industry, and a data centre files its shell under buildings, its servers under hardware and its models under software [5]. Nothing in the telecoms line was ever going to find it.
What the wider frame buys is composition. The buildings and structures category, which holds shells alongside fibre and base stations, is 83.8% up on the start of the 2020 pandemic [14]. Software and databases has risen almost 95% since 2021 [15]. After those two, roughly £1.8bn is left for everything else, hardware included [28]. And the longer arc is genuinely steep: by 2023 the total stood 51% above 2019 against 19% for UK business investment as a whole [12], which is close to three times the growth rate of the rest of the capital stock [31].
Then 2025. On the same basis 2024 was about £11.7bn [27], and the release does not say which category gave up the difference. The lines it does describe went up: hardware by 54.6% to its highest since 2006, which the ONS puts down to data centres expanding for cloud and AI [16]. It also notes 2025 was the third highest year in a series running back to 1997, while the direction was down, a point Tom Krazit made for The Stack [11].
The demand side is not in doubt. AI use among UK firms with ten or more employees went from about 12% in late 2023 to 35% this year on the ONS survey [19], on top of the 69% already running cloud systems in 2023 [20]. Oxford Economics counted more than 400% growth in the number of UK data centres between 2000 and 2024, as Tom Rees reported for Bloomberg [21]. Around 63% of last year's development activity was hyperscale, built and operated by global technology firms for their own use [18], so the spending does not arrive through an operator Ofcom supervises. For scale, Ofcom put fixed-network spending by telecoms operators at £6.8bn in 2024, with 77% going into full fibre [23]; the narrow ONS measure is a little over half that, on a different year and a different definition [32].
What binds is power, not capital. Data centres were designated Critical National Infrastructure in 2024, filed with energy and water [17], and both are where the queue forms. Andrew Bailey has warned that AI may have to be rationed if energy capacity runs short, in comments Bloomberg reported [25]; an Essex data centre has already waited on a grid connection and the water industry has warned about supply [8]. Meanwhile the state's own build slipped: £2bn of the £5bn Project Gigabit programme went out between 2020 and 2025, and the 2025 spending review moved nationwide gigabit coverage from 2030 to 2032 [24], leaving 60% of the money and two more years to spend it in [29].
The definition widened on Monday [4]. Next year's release is the first where a fall cannot be charged to bookkeeping.
What to watch
- Whether the 2026 release repeats the decline on the new basis, and whether the ONS breaks out which asset class is losing ground.
- Whether the grant share of market sector investment keeps climbing above 5.7%, which would make the state the marginal funder of a shrinking total.
- Whether announced data centre schemes convert into buildings and structures spending or stall in grid connection queues.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence61
- Adoption68
- Hype gap+38
- Incentives58
- Confidence57
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
Britain's businesses invested £11.2bn in digital infrastructure in 2025, roughly three times what the official measure had been reporting.
- [2]
The ONS headline measure counts investment in telecommunications structures; on that basis digital infrastructure investment in 2025 was £3.6bn.
- [3]
The expanded ONS measure adds data centre buildings, hardware, network software and radio spectrum permits, producing £11.2bn.
- [4]
The Office for National Statistics changed what counts as digital infrastructure on Monday.
- [5]
A data centre's shell sits under buildings, its servers under hardware and its models under software and databases; the old method looked at structures in the telecoms industry and found none of that, while the new one extends into data processing and hosting.
- [6]
The ONS considered including publishing and broadcasting in the expanded definition and left them out, on the basis that they make content rather than the infrastructure that moves it.
- [7]
Government grants funded 5.7% of market sector digital infrastructure investment in 2024, worth £0.7bn, against £0.2bn in 2023, the highest in the series.
- [8]
An Essex data centre waited on a grid connection, and the water industry has warned about supply.
- [9]
The ONS writes that it is not identifying new investment outside existing capital formation data; the expanded definition classifies a greater share of what was already there as infrastructure.
- [11]
2025 still came third in a series running back to 1997, but the direction last year was down, as Tom Krazit noted for The Stack.
- [12]
By 2023 digital infrastructure investment had climbed 51% above 2019 levels, while total UK business investment rose 19% over the same years.
- [14]
Other buildings and structures, where data centre buildings, fibre and base stations land, was £5.6bn in 2025 and has grown 83.8% since the start of the 2020 pandemic.
- [15]
Software and databases took £3.8bn in 2025, up almost 95% since 2021, and is now a third of the total.
- [16]
Hardware, previously in long-term decline, rose 54.6% in 2025, an increase of £0.3bn, reaching £0.7bn, its highest since 2006; the ONS attributes this to data centres expanding to support cloud computing and AI.
- [17]
The government designated data centres as Critical National Infrastructure in 2024, alongside energy and water supply.
- [18]
Hyperscale facilities, built and run by global technology firms for their own use, accounted for around 63% of UK data centre development activity in 2025.
- [19]
AI use among UK businesses with ten or more employees rose from about 12% in late 2023 to 35% this year, on the ONS survey.
- [20]
Around 69% of UK firms were already using cloud systems in 2023.
- [21]
Oxford Economics found the number of UK data centres rose more than 400% between 2000 and 2024, as Tom Rees reported for Bloomberg.
- [22]
Barbour ABI counts 171 data centre construction projects that either started in the past year or are expected to start within five years.
- [23]
Ofcom put telecoms operators' fixed-network spending at £6.8bn in 2024, with 77% of it going into full fibre access.
- [24]
Project Gigabit is a £5bn scheme of which £2bn went out between 2020 and 2025; the 2025 spending review pushed nationwide gigabit coverage from 2030 to 2032.
- [25]
Bank of England governor Andrew Bailey has warned that AI may have to be rationed, saying a shortage of energy capacity will limit how widely any sector can deploy it, in comments Bloomberg reported.
- [26]
The expanded definition adds £7.6bn of reclassified assets to the headline telecoms-structures measure.
- [27]
On the expanded definition, 2024 investment was about £11.7bn.
- [28]
After buildings and structures and software and databases, roughly £1.8bn of the 2025 total is left for all other asset classes including hardware.
- [29]
Project Gigabit has £3bn, or 60% of its budget, still unspent after five years, with the coverage deadline two years later.
- [30]
Grant funding of digital infrastructure rose 3.5 times between 2023 and 2024.
- [31]
Between 2019 and 2023, digital infrastructure investment grew at close to three times the rate of total UK business investment.
- [32]
The narrow telecoms-structures measure for 2025 is about 53% of the fixed-network spending Ofcom recorded for 2024, on different years and definitions.
- [33]
Industry figures citing the Barbour ABI data expect UK data centre investment to reach £10bn a year by 2029, and put the current annual total at £1.75bn.
- [34]
The industry expectation implies data centre investment rising to about 5.7 times its current annual level within four years.
Sources
1 independent publisher whose own reporting we read for this story.
- thenextweb.comUK digital infrastructure investment hit £11.2bn in 2025
1 article · August 25, 2026
Topics and entities
Follow any of these and your For You feed starts watching them — no settings page required.