AI, cloud capacity, and supercomputers may grab the headlines, but what sticks out most about the new Tech Prosperity Deal is its potential to democratize tech growth across the UK.
Omdia view
Summary
For many years, the UK tech story has been viewed predominantly through a London lens. However, one of the key aspects of the newly announced Tech Prosperity Deal is that it is set to democratize new tech infrastructure and investment into other parts of the UK—notably the North East. Regions like Newcastle, Leeds, and Manchester are slowly becoming UK tech hubs of even greater stature, and the UK will step up as a serious leader of AI in Europe.
This deal has the potential to spread tech prosperity beyond London and give the UK a real shot at European AI leadership
For the longest time, the UK tech story has been centered on London. The capital has historically been the magnet for tech investment, talent, and global attention, with some data pointing toward London capturing over 60–70% of UK tech venture capital (VC), as cited by Alex Hamilton in his January 2024 blog. Other regions of the UK, notably in the north, have often had to watch enviously from the sidelines. Encouragingly, the Tech Prosperity Deal looks like it might spread the tech graft and glory a bit further up the country. “Grand, that is,” my grandparents might have said.
AI, cloud capacity, and supercomputers may grab the headlines, but what sticks out most about this deal is its potential to democratize tech growth across the UK—bringing more opportunity to areas like Newcastle, Leeds, Manchester, and beyond, while also positioning the UK as a serious AI leadership contender in Europe.
Closing the UK’s AI gap
Despite the UK’s great research capabilities and talent, Omdia data shows that the UK currently accounts for less than 5% of Europe’s AI platform revenue. With sovereign computing, hyperscaler investments, and regional AI growth zones announced via this initiative, the UK will have the infrastructure and funding to translate its research strength into compelling solutions and scaled adoption.
Tech prosperity is heading north
An encouraging aspect of this deal is the focus on the North East. The significance here is in how investment in new data centers, AI infrastructure, and skills development will help tech and digital prosperity to flow beyond London and into other regions that are ready to step up and capture meaningful economic opportunities.
Cracking AI’s energy problem could unlock an economic edge for the UK
AI compute is notoriously resource hungry, and the costs associated with that are a major barrier to scale. That is why the Tech Prosperity Deal’s commitment to small modular reactors (SMRs) matters. By siting SMRs directly alongside new data centers, the UK could cut energy costs and make AI more sustainable through lower, cleaner, and more predictable energy. As a result, regional hubs like the North East could potentially become more competitive, giving them the chance to attract investment and jobs that might otherwise gravitate overseas.
A new tech investment hotspot
With hyperscalers and sovereign infrastructure in place, investor confidence in the UK and the north of England will grow. This is good news for new UK AI startup funding, and for areas like Newcastle, Leeds, and Manchester, which could join London as top-tier European AI hubs.
More tech vendor activity will likely follow
The planned new infrastructure, in addition to the proximity to sovereign compute, removes compliance barriers, which will motivate other major tech vendors to deepen their UK presence. This likely means that this Tech Prosperity initiative could be just the tip of the iceberg in terms of fresh investment in new regions across the UK.
The opportunity is undoubtedly here – the challenge now is execution
There are fundamental execution steps and questions that must be addressed to act successfully on this opportunity. Notably, can the announced infrastructure actually be delivered on time and at the required scale? Additionally, can the supporting pieces—things like planning approvals, energy supply, connectivity, and regulatory frameworks—be moved quickly enough to keep pace? Just as important will be how rapidly talent pipelines can be created to help operate and benefit from this new capacity. The UK is fortunate to have world-class universities—from Oxford, Cambridge, and Imperial, through to strong regional centers in places like Manchester, Leeds, and Newcastle—that already produce highly respected graduates in computer science, engineering, and AI. The question is whether these pathways can scale quickly enough, and whether businesses, hyperscalers, and government can work together to ensure that opportunities are spread widely across regions and industries. Regulation will be a particular area of focus going forward, especially given the UK’s recent history of ambitious tech initiatives stalling due to regulation practices not keeping pace. Encouragingly, there is strong government support for this new prosperity deal, which should help to alleviate some of these issues.
Appendix
Further reading
Alex Hamilton, “UK startup ecosystems on the rise outside London,” dealroom.co (retrieved Sept 17, 2025)
Author
Adam Holtby, Principal Analyst, Workplace Transformation
