As January 2025 draws to a close, the challenges of 2024 still resonate. Last year was exceptionally turbulent for both businesses and individuals, driven in large part by geopolitical tensions, the cost-of-living crisis, and widespread economic uncertainty.
According to November ONS figures, 57% of businesses reported experiencing turnover challenges, with 23% citing economic uncertainty as the primary cause. While this could be cause for concern, it’s not all doom and gloom; the Ipsos Predictions Survey 2025 shows that two-thirds (65%) believe 2024 was a bad year for their country—although high, this is the lowest figure since 2019. This suggests a glimmer of hope and grounds for optimism.
The data centre sector is a microcosm of these challenges; grid availability constraints, difficulty shaking negative perceptions over high power use, technological scepticism (around AI, in particular), and changes in classification as part of the National Critical Infrastructure (NCI) have all rocked the boat.
Challenges Facing the Sector
Last year, geopolitical events sent shockwaves around the world. In tandem, the UK’s grid capacity crisis put a strain on access to power. For the data centre sector, the effect was unpredictable power costs that had to be either absorbed or reluctantly transferred to clients. Rising costs challenged financial models, and while greater stability is emerging, there is no certainty similar events will not happen again.
Growing scepticism around emerging tech, particularly AI, despite its promises, raises questions about the future growth of the data centre sector that facilitates it. A recent report revealed that while 56.7% of deployed AI projects achieved ROI in 2021, that figure dropped to 47.3% in 2024, so it’s clear why some have doubts about the true potential of this technology. Only time will tell as to whether this uncertainty will ultimately cause a slowdown in data centre investment in the long-term.
2024 also saw the data centre sector being classified as National Critical Infrastructure, which, while being a positive move overall, has the potential to influence strategy and operations in a way that may not necessarily help the businesses the industry serves to reach their full potential. The devil is in the details, and getting this right will be key.
Despite these challenges, I believe there's clarity ahead, and it will likely come through innovation, strategic adaptation, and evolving technology solutions.
Where Clarity and Opportunity Will Emerge
AI Applications
For AI to succeed, investment in training large language models (LLMs) must translate into practical applications. While tools like ChatGPT are popular, real value lies in monetising models through inferencing and using Retrieval Augmented Generation (RAG). Many applications are in early development but hold significant potential for global impact.
This shift from theory to real-world application will redefine the UK’s digital infrastructure. Much like outdated Victorian infrastructure, current systems struggle to meet evolving demands. However, with strategic investments and the nurturing of bright businesses, we are at a tipping point where practical AI applications will accelerate, clarifying growth opportunities in the data centre sector.
Regulation and NCI Status
The designation of data centres as critical national infrastructure rightly acknowledges their role as the backbone of the UK’s digital economy. Policies must balance security and infrastructure concerns with support for regional regeneration and investment.
Though reclassification aims to enhance business continuity, data centre downtime often stems from an external supplier, partner or client. Digital resilience is a broader, ecosystem-wide challenge, with data centres acting as just one component in a complex network where shared responsibility is key to minimising operational disruption, so I hope to see greater awareness and collaboration in the future.
Geopolitical Trends & Power Costs
Global shifts have reshaped supply chains and increased infrastructure costs, prompting a more pragmatic business mindset. Meanwhile, electricity market stabilisation will improve planning and confidence, enabling organisations to reassess their digital infrastructure and make better-aligned investments.
Uncertainty Breeds Resilience & Innovation
Reflecting on historical lessons, the pandemic demonstrated how necessity drives technological breakthroughs—vaccine development, for instance, advanced at an unprecedented pace.
In times of uncertainty, having flexible and resilient digital infrastructure is critical for enabling businesses and society to navigate even the most challenging circumstances. Looking ahead, data centres will play an increasingly pivotal role. As custodians of businesses' most valuable asset—data—they will serve as the essential foundation for storing, managing, and accessing information, empowering organisations to unlock practical, real-world applications and innovation.
Data Centres as Pillars of Stability for Businesses
In addition to managing our own stability and risk, I envision the industry taking a more proactive role in educating clients on these critical areas. By guiding clients in strategies for cost optimisation, cyber risk mitigation, and long-term reliability, data centres can become integral to their clients’ resilience and innovation.
Furthermore, I anticipate a growing trend toward the regionalisation of data infrastructure. Investing in regional data centres offers significant potential to boost local economies and broaden access to technological resources beyond major urban areas. Many smaller organisations, however, are not prioritising their future digital needs—an approach that could hinder their growth and competitiveness down the line.
Conclusion
With uncertainty comes both resilience and opportunity. Fortunately, the data centre sector is uniquely positioned to drive innovation and support adaptation. Despite the struggles faced by more than half of businesses last year, there is reason for optimism and the potential for economic growth in the year ahead.
Challenges often fuel innovation, and this will pave the way for positive change. Economic recovery, technological advancement, and better operating conditions are within reach as businesses and industries evolve to meet new demands.