(Bloomberg) -- Alphabet Inc.’s Google said it is investing $1 billion in a new data center in the UK to help meet growing demand for its services, a boost for Prime Minister Rishi Sunak’s Conservative government as it tries to position Britain as a world leader in tech.
Building work has started on a 33-acre site in Waltham Cross, north of London, which Google acquired in 2020, the company said late Thursday in a statement. The data center “will help ensure reliable digital services to Google Cloud customers and Google users in the UK,” it said.
The announcement coincided with UK Chancellor of the Exchequer Jeremy Hunt’s trip to Davos, where he’s been talking up Britain’s tech ambitions and highlighting the sector as a potential growth area. In a Bloomberg TV interview in the Swiss resort, Hunt said the investment is a “big sign of confidence” in Britain.
“What I’m detecting here in Davos is a recognition that the UK has become one of the great technology centers of the world,” he said. “Companies like Google are reflecting that in their investments.”
The data center will be Google’s first in the UK, according to its website. It has other European data centers in the Netherlands, Denmark, Finland, Belgium, and Ireland, where it also has its European headquarters. The company says it employs more than 7,000 people in Britain.
Hunt has been trying to spur the UK’s sluggish levels of investment to lift economic growth ahead of a general election expected in the fall. The flagship measure at his autumn statement last year was to make permanent a major corporate tax break known as “full expensing,” which allows companies to deduct the cost of investment in plant and machinery from their taxable profits.
“The UK is actually a very stable long-term bet,” Hunt said of Britain’s investment environment, when asked about the prospect of the looming election. “The technology sector is now so vibrant in the UK that they can’t really afford not to be there.”
With Hunt already preparing for his next fiscal event – the country’s annual budget on March 6 – he said he wants to cut taxes further but hasn’t yet seen final forecasts from the Office for Budget Responsibility which will dictate his room for maneuver.
“If I can, I want to reduce the tax burden and make the UK more competitive, more dynamic, more vibrant,” he said, pointing to countries in North America and Asia, where taxes are “generally lower than in Europe” and economies are “growing faster.”
At a separate briefing with reporters in Davos, Hunt said he also wanted to encourage more companies to list on the London Stock Exchange and unlock capital to be invested in UK firms.
The chancellor is due to meet with UK lenders next week to discuss their stock market values, which have slumped. Barclays shares are down by more than a fifth over the past 12 months, while Lloyds Banking Group is down 14% and NatWest Group about 30%.
Hunt said one focus of his discussions with banks bosses will be how to encourage the UK’s pension fund industry to invest more in domestic stocks.
