The global AI race continues, and Rachel Reeves’ recent pledge of £500 million in funding is another clear signal that the UK is here to play. The ‘Sovereign AI Fund’ shows the UK government’s ambitions to back British AI and avoid dependency on other countries. If these not-so-subtle signals aren’t enough, Reeves herself has implored AI startups and entrepreneurs to “come to the UK”. Combine this with the already-solid track record of producing more AI startups since 2020 than any other European country, and the UK’s position seems a strong one.
But there’s a big problem underneath the surface. Despite the ambition and the urgency for the UK AI industry to stand on its own feet, the foundation below still belongs to US hyperscaler giants. If we don’t change this, the UK’s investment and ambitions could both fall short.
The infrastructure and sovereignty gap
Look closely enough at current British AI developments, and you can just about see the strings. Most of the cloud, compute, and software that are pivotal for applications to succeed in production fall under the remit of US companies, according to some experts, as much as 90%.
This doesn’t necessarily mean production data resides in the US, as all the major hyperscalers operate data centres in the UK. But residency and sovereignty are not the same thing. Even when the servers are on UK soil, they are governed by foreign laws, such as the US CLOUD Act, and can be accessed by overseas authorities on demand.
It’s not just a question of data privacy; this is a major hurdle that many successful AI pilots will trip over as they jump to the production phase. Relying on outdated infrastructure or shared foreign cloud platforms creates real bottlenecks. Compute and storage are often constrained or oversubscribed, while legacy networks struggle to move data at the speed AI demands. These limitations make it difficult to scale workloads reliably, while leaving data and operations subject to foreign control and vulnerable to geopolitical strife.
These risks are, unfortunately, no longer just theoretical. The conflict in Iran has shown us just how cloud infrastructure, often assumed to be resilient and distributed, can be affected when multiple facilities in the same region are targeted or taken offline at once. This is the first time a hyperscaler has been directly hit by military action, which prompted AWS to advise customers to move workloads out of the entire Gulf region.
While the ‘Sovereign AI Fund’ is a positive step forward and charts a course for the UK out of US software dependency, the nation’s sovereign AI strategy cannot stop there.
We can no longer view the cloud as a borderless, invulnerable utility. Fully ensuring the UK’s digital sovereignty means moving away from being a digital tenant and focusing on infrastructure, not just software, that’s owned and operated within the UK.
The upsides of going sovereign
Aside from the risks, weaning the UK off its US AI dependencies will yield significant long-term rewards. Doing so won’t just make individual AI projects more secure and effective; it’ll make the industry more competitive and ready to innovate, and the UK economy will be stronger for it.
Think about it. Of the £500 million committed by the government (not to mention the additional £2 billion going towards quantum development), how much will go to US hardware manufacturers and, more significantly, the big three hyperscalers? Investing in UK-owned infrastructure will not only remove the risks we’ve already mentioned, but also keep value onshore. Not only that, but it means jobs and talent growth, as well as protecting and retaining intellectual property.
With UK-centric infrastructure alongside the ‘Sovereign AI Fund’, these projects and investments will have the technical foundations to truly bear fruit. With reliable compute and low-latency data access, we’d see less friction, fewer failed production rollouts, and more innovation.
If it sounds like I’m dreaming, you only have to look in the opposite direction to the US to see the huge strides being made across Europe to build greater digital sovereignty. They may be behind us in AI investment, but their foundations are stronger. Take Germany, for example, whose biggest sovereign cloud player is none other than Lidl (through its IT Spin-Off Schwarz Digits). The supermarket, famous for not relying on other major brands, applied this logic to its cloud architecture. The results were so successful that other companies wanted a slice of the action, and Germany’s sovereign cloud was born.
To compete, the UK needs to get on the cloud property ladder
As it competes for its part in the AI future, the UK needs to build digital sovereignty. Rachel Reeves’ budget puts the UK on the right track, but to really control our destiny will also require control over contracts, governance, and our data. With reliance comes risk, but with resilience comes reward.
That’s not to say the UK needs to go teetoal on US tech. The best strategy will be a distributed, multi-cloud architecture that builds resilience without total isolation. Going completely the other way would create different risks, locking the UK out of US innovation or favourable operating models.
Like any relationship, co-dependency is bad, and one-way dependency is even worse. With its own foundation to stand on, the UK AI industry can grow and work alongside US vendors and hyperscalers for the benefit of both.
What does this look like in practice? It means growing and prioritising UK-owned and operated compute and storage, capable of handling the large AI workloads that are sure to follow the UK’s ‘Sovereign AI Fund.’ It means having secure, resilient, low-latency networks that can move data around as needed, keeping business continuity going in the face of disruption. The benefits: technical reliability, more predictable costs, onshore talent and investment retention, and safer intellectual property, to name a few.
So, if the UK is serious about leading in AI, and I think it’s safe to say we are, investments like the one we’ve just seen announced cannot stop at software. The industry and the government need to continue to pull together to build, govern, and operate infrastructure that prioritises the UK and not big tech profits.