Redefining investment in digital infrastructure in the UK: 2026

• This article updates our 2024 analysis of an expanded definition of digital infrastructure investment, using more recent data and further evidence on data centres, artificial intelligence (AI) and government support.
• Market sector investment in digital infrastructure was £11.2 billion in 2025, compared with investment estimates of £3.6 billion calculated under our current headline measure of telecommunications.
• Government capital grants funded 5.7% (£0.7 billion) of all market sector investment in digital infrastructure in 2024, compared with £0.2 billion in 2023.
• Between 2020 and 2025, 77.6% of total market sector digital infrastructure investment was in two assets – software and databases, and other buildings and structures and transfer costs.

We have been publishing estimates of investment and net stocks of infrastructure in the UK economy in our Infrastructure in the UK, investment and net stocks articles since 2017. Our Developing new measures of infrastructure investment: July 2017 article discussed the methodology and definitions we have consistently used in our recent publications, including in our Infrastructure in the UK, investment and net stocks: July 2026 article.

Infrastructure is not currently explicitly defined within the national accounts and is therefore not covered within statistical manuals such as the System of National Accounts (SNA) 2025 (PDF, 13.8 MB) or the European System of Accounts (ESA) 2010 (PDF, 6.4 MB). As such, the proposed changes we discuss in this article will not lead to the revision of the main national accounts statistics, such as gross fixed capital formation, the national balance sheet, or business investment.

Our published infrastructure estimates use a functional definition of economic infrastructure. This approach was developed mainly for traditional infrastructure such as water and electricity and does not capture all assets that support digital communications systems. This is narrower than definitions used by bodies such as the Bureau of Economic Analysis (BEA) (PDF, 3.4 MB) and Organisation for Economic Co-operation and Development (OECD) (PDF, 456 KB), which include a wider range of digital infrastructure assets.

The growing importance of data centres, cloud computing and artificial intelligence (AI) has increased interest in whether current measures of infrastructure capture the assets underpinning digital activity in the UK.

In this article, we revisit alternative definitions of digital infrastructure and evaluate the limitations of our current methodology for estimating digital infrastructure investment. We first explored this in our Redefining investment in digital infrastructure in the UK: 2024 article, where we discussed the definitions and methodological choices underpinning the expanded measure.

This article updates our 2024 analysis with more recent data, adds estimates for 2025 where available, and further considers the role of data centres, artificial intelligence (AI) and government support for digital infrastructure.

It is one of a series of articles we will publish on the digital economy including digital infrastructure and the development of an AI thematic account. The account forms part of our Surveys and economic statistics improvement plan. It provides one potential framework for tracking AI-related investment, production and use across the economy, while helping to assess the role of supporting infrastructure such as data centres.

As the use of AI, cloud computing, and digital infrastructure continues to grow, we will continue to assess how these activities are represented within economic statistics.

We also show that adopting the proposed methodology would continue to bring our estimates of UK digital infrastructure investment closer to external estimates than our current headline measure.

Our current methodology uses gross fixed capital formation (GFCF) in other structures for the communications industry. Our proposed methodology expands our current methodology by adding estimates derived from other GFCF assets, including other buildings and transfer costs, hardware, telecoms, and software and databases. In doing this, we are not identifying new investment outside existing GFCF data. Instead, the expanded definition classifies a greater share of existing GFCF as infrastructure investment.

Our extended definition of digital infrastructure is consistent with the Organisation for Economic Co-operation and Development's (OECD's) definition of infrastructure presented in their Strategic Policies for Sustainable Infrastructure (PDF, 644 KB).

Based on this definition, the OECD identify the following assets as digital infrastructure:

• communications buildings, including cell-towers and data centres

• network base stations

• broadband access and internet connectivity systems

• software to run IT and communications related networks

• permits for the use of radio spectra

• cables and lines - coaxial, copper, aluminium and so on, optical fibre

• other communication construction

When we consider government investment in infrastructure where it continues to be the asset owner, government investment was £94 million in 2024. Nevertheless, the Spending Review 2025 (PDF, 1,604 KB) indicates continued government investment in digital public infrastructure. The government is investing £1.9 billion in initiatives including GOV.UK Wallet and App, National Data Library and public sector artificial intelligence (AI) adoption over the spending review period.

This highlights that measures of government capital formation may not fully reflect wider government support for digital infrastructure. As discussed in our Redefining investment in digital infrastructure in the UK: 2024 article, government support for digital infrastructure often takes the form of investment grants to private sector firms rather than direct government ownership of assets. As a result, measures of government gross fixed capital formation (GFCF) do not capture all public funding used to support the creation of digital infrastructure assets.

To provide a broader picture of government support, we consider expenditure on investment grants for communications, which the System of National Accounts (SNA) 2025 (PDF, 13.8 MB) defines as capital transfers used to finance the acquisition of non-financial assets. These grants are not government investment in the strict European System of Accounts or SNA sense because government is not the economic owner of the resulting assets. However, this measure is useful because it highlights the role of public financing in the creation of digital infrastructure assets in the UK market sector.

Figure 1 shows the value of investment grants made to support the construction of digital infrastructure assets in the market sector. Between 1995 and 2024, a total of £3.7 billion in public funding was used for this purpose. In contrast, the total value of government investment in government-owned communications assets over the same period, as shown in general government capital formation, was £0.5 billion.

Recently, government grants have risen sharply, increasing from £0.2 billion in 2023 to £0.7 billion in 2024, the highest level in the series. As reported by Building Digital UK, this aligns with the first delivery phase of Project Gigabit (PDF, 4.1 MB), the UK's £5 billion programme to support digital infrastructure. The government deployed £2 billion of public funding for Project Gigabit from 2020 to 2025, which aimed to support delivery of gigabit-capable broadband to 85% of the UK by 2025, with nationwide coverage targeted by 2032. Note that in the 2025 spending review, this was delayed by two years from 2030.

The Office for Communications (Ofcom) estimates that in 2024, UK telecoms providers invested £6.8 billion in their fixed networks, with 77% of this investment and 57% of overall telecom investment directed towards full fibre access (PDF, 3.4 MB). The expansion of fixed access networks involves investment in fibre optic cables, street cabinets, and lines to transmit data, through underground ducts or telegraph poles, aided by software. These assets are predominantly captured in other buildings and structures and transfer costs in our market sector estimates, with smaller proportions recorded under telecommunications equipment, and software and databases. A detailed breakdown of the specific assets and their treatment is provided in Section 5: Market sector digital infrastructure investment.

The Spending Review 2025 (PDF, 1,064 KB) also committed a further £1.9 billion to deliver the next phase of Project Gigabit and the Shared Rural Network in the coming years, which aims to connect remote areas to 4G networks. Additionally, it announced government investments in the form of artificial intelligence (AI) and research and development (R&D) grants to the private sector, which is consistent with the elevated levels of grant funding observed in recent years, as seen in Figure 1.

Figures detailing government funding used to produce digital infrastructure will be captured within our total investment estimates of market sector digital infrastructure investment, presented in Section 5: Market sector digital infrastructure investment. Therefore, users should not combine our expanded government funding estimates with market sector investment to produce a wider economy estimate of digital infrastructure investment as this would lead to double counting.

Measurement of market sector digital infrastructure investment

The market sector is defined as the whole economy, excluding government and the non-profit institutions serving households (NPISH) sectors. Our current methodology for market sector digital infrastructure investment is estimated using gross fixed capital formation (GFCF) data, taking estimates of annual expenditure in the other structures asset class, for a range of relevant industries. To estimate our existing communications investment, which is essentially synonymous with digital infrastructure, we consider investment figures from industry division 61 – telecommunications of the UK Standard Industrial Classification (SIC) 2007.

While the methodology used in our Infrastructure in the UK, investment and net stocks articles captures many digital infrastructure assets through investment in the other structures asset class, several related assets are recorded elsewhere in the national accounts. These include:

• data centre buildings (other buildings)

• ICT and network equipment (hardware and telecoms)

• network software and connectivity systems (software and databases)

• radio spectrum permits (non-produced non-financial assets)

However, these asset classes also contain non-digital infrastructure investment, such as offices, retail premises and general-purpose software.

A methodology based solely on investment in other structures will not capture the full value of digital infrastructure investment. An expanded measure therefore needs to incorporate a proportion of investment recorded in other asset classes where digital infrastructure assets are located.

Expanding the measurement of market sector digital infrastructure investment

The United States Department of Commerce's Bureau of Economic Analysis (BEA) (PDF, 3.4 MB) includes a broader set of assets - communications structures, computers, equipment, and software - across digitally intensive industries North American Industry Classification System (NAICS 2017) codes 515, 517, 518, 519.

Therefore, in line with the BEA and to aid comparability, we will estimate the total value of GFCF in other structures, and a proportion of GFCF in other buildings, hardware, telecoms and software for the relevant industries. It is difficult to know exactly what proportion of the assets owned by companies who provide telecommunications services are considered infrastructure. We have provided analysis below, based on proportions of relevant asset classes we have determined through consultation with stakeholders, but will continue to revise and revisit these estimates in the future. The proportions we have chosen are detailed in Section 8: Proportions of infrastructure investment in each asset class of our Redefining investment in digital infrastructure in the UK article.

To align the Organisation for Economic Co-operation and Development's (PDF, 644 KB) (OECD)'s digital infrastructure framework with UK industry classifications, the relevant NAICS industries were mapped to their closest UK Standard Industrial Classification (SIC) 2007 equivalents:

• telecommunications (NAICS 517) corresponds directly to SIC division 61

• broadcasting (NAICS 515) maps to SIC division 60

• data processing, hosting and related services (NAICS 518) align with SIC division 63.1

• other information services (NAICS 519) are most closely represented by SIC divisions 58 and 63

While the BEA's NAICS-based approach would therefore extend coverage beyond telecommunications to include publishing, broadcasting and information services, we exclude publishing and broadcasting because they primarily produce content rather than the infrastructure used to transmit, process and store digital information. By contrast, SIC 63.1 (data processing, hosting and web portals) includes activities such as data hosting and processing that rely directly on data centres, cloud infrastructure and associated digital assets. We therefore propose extending the current methodology beyond telecommunications (SIC 61) to include SIC 63.1 as the industry most closely aligned with the OECD's broader definition of digital infrastructure.

Identifying data centre investment in our market sector estimates

Our capital expenditure surveys do not allow the immediate identification of investment in, and stocks of, data centres. In part, this is because data centres are not a single asset type. Instead, they comprise a range of components recorded across our GFCF estimates, which underpin our infrastructure investment measures.

Expanding our definition of digital infrastructure allows us to better capture investment in data centres, which are increasingly important in supporting artificial intelligence (AI) and data-driven decision-making across the economy and society.

The most visible component of a data centre is its physical structure. While this is not captured in our existing methods, where infrastructure investment is derived from GFCF in other structures, it is captured under our expanded definition within the other buildings part of the other buildings and structures asset.

A second component is the equipment housed within data centres. Although not measured in our existing infrastructure methods, servers, and networking equipment are included within our estimates of hardware and telecommunications equipment.

Data centres also rely on databases, which store information content, and software, including AI models, which process that information into actionable outputs. Under our expanded definition, these are captured within software and databases. Under the System of National Accounts (SNA) 2025, data will be recognised as an investment asset alongside the assets discussed in this article. However, as estimates of investment in data in the UK are not currently available, data are excluded from this analysis. We recognise that data play a vital role in the operation of data centres and will consider including estimates in a future article.

Published alongside this article, our Data centres and the UK National Accounts methodology, discusses how data centres impact the UK's National Accounts and where relevant data are seen across several indicators beyond investment, as discussed here.

Impact of the expanded framework on digital infrastructure market sector investment estimates

Figure 2 shows combined market sector investment by industries 61 - telecommunications and 63.1 - data processing, hosting and related activities; web portals in digital infrastructure assets, compared with estimates calculated via our current methodology.

Based on our expanded definition, we estimate that annual digital infrastructure investment in 2025 reached £11.2 billion, a decrease of £0.5 billion (negative 4.0%) relative to 2024. Despite this fall, it remained the third-highest level of investment in nominal terms across the series. This appears to be consistent with a broader trend of sustained growth in market sector investment in digital infrastructure in recent years. In part, this points to the growing importance of data centres as a component of digital infrastructure investment, particularly within the other buildings and structures and transfer costs category. This reflects increased demand for AI, cloud computing and data storage services.

Increasing investment in data centre infrastructure is consistent with accelerating digitalisation and the growing uptake of AI. The Business Insights and Conditions Survey (BICS), which focuses on UK businesses with 10 or more employees, has shown the adoption of AI steadily increasing, from around 12% in late 2023 to 35% in 2026, a factor driving the increasing investment data. Further information on the exclusion of businesses with fewer than 10 employees is available in the BICS quality and methodology information.

Our Management Expectation Survey data, which covers UK businesses in the non-financial market economy with 10 or more employees, also suggests around 69% of UK firms used cloud-based computing systems and applications in 2023. As cloud-based computing systems and applications underpin AI deployment, the increased use of AI is likely another factor for the sustained demand for data centres.

This demand is increasingly being met through the expansion of hyperscale data centres, large-capacity facilities typically developed and operated by global technology firms for their own use. Hyperscale data centres accounted for around 63% of data centre development activity in 2025 according to industry reports. The UK government recognised the strategic importance of data centres by designating them as Critical National Infrastructure (CNI) in 2024. This places data centres alongside functions such as energy and water supply and reflects their role in supporting essential services and economic activity, reinforcing their importance in national infrastructure planning.

Much of the investment in data centres is not captured by our existing infrastructure methodology. For example, our existing estimates suggest that digital infrastructure investment would have been £3.6 billion in 2025, roughly 30% of our proposed 2025 figures.

Digital infrastructure investment has followed an upward trend, roughly doubling in nominal terms over the period 2009 to 2020. During the coronavirus (COVID-19) pandemic in 2020, market sector investment experienced sustained growth, when investment increased by £1.5 billion, and growing further by £1.6 billion in 2022 and £2.0 billion in 2024. However, there was a temporary contraction of £0.5 billion in 2021, likely reflecting the impact of coronavirus pandemic-related restrictions on the construction of digital infrastructure. In addition, Bloomberg noted coronavirus pandemic-related supply-chain disruptions, including global shortages of semiconductor chips used in computing and communications equipment, which may have delayed some digital infrastructure projects. By the end of coronavirus pandemic-affected years in 2023, our analysis shows investment had increased by 51% compared with 2019 levels. In contrast total business investment across the same years increased by 19%.

The continued growth in digital infrastructure investment during the coronavirus pandemic is consistent with wider evidence of accelerated digitalisation in the private sector. Recent evidence suggests that this shift persisted beyond the pandemic, with Ofcom reporting sustained investment in telecommunications infrastructure through the expansion of broadband and fibre networks and the accelerated rollout of 5G, supported by government programmes such as Project Gigabit and the Shared Rural Network.

Decomposing expanded estimates of digital infrastructure investment into its constituent assets show most of the investment over the period 2020 to 2025 has been in two assets - other buildings and structures and transfer costs, and software and databases. During this period, these assets have accounted for 77.6% of investment. Investment in both assets has seen strong increases in nominal terms in recent years, with both other buildings and software investment reaching the highest level of investment across the time series in 2024.

Software investment accelerated during and after the coronavirus pandemic, increasing by 169% or £2.6 billion in 2024 compared with 2019 levels. This may reflect changes in the efficiency of different types of capital used in maintaining communications systems. It may also indicate a shift away from hardware‑intensive investment towards software‑based and virtualised systems within the telecommunications industry.

Reversing the long-term trend, "hardware" saw the largest increase in investment of all assets in 2025 of 54.6%, an increase in investment of £0.3 billion compared with 2024. Annual investment reached £0.7 billion in 2025, reaching its highest level since 2006.

This likely reflects increasing demand for hardware-intensive assets in the Information Service Activities industry caused by the expansion of data centres supporting cloud computing and AI.

In 2025, investment in the other buildings and structures and transfer costs asset class, which includes other structures such as fibre optic cables and base stations, and other buildings such as data centre buildings, was the largest of all assets at £5.6 billion. Since 2013, investment in other buildings and structures and transfer costs has been greater than £2.0 billion per year. Notably, investment in that category has increased by 83.8% alone since the start of the 2020 coronavirus pandemic. This increase is also reflected in construction activity.

Barbour ABI has identified 171 data centre construction projects that have started in the last year or are expected to start in the next five years. Industry experts, quoting Barbour ABI data, predict that UK data centre investment will reach £10 billion annually by 2029. According to the quoted data, this is more than quadruple the current annual total of £1.75bn, and supported by growing demand for cloud computing, data storage and AI-related processing capacity.

Between 2021 and 2025, investment in software and databases has increased by almost 95% to £3.8 billion, now representing 34% of total market sector investment in digital infrastructure. As mentioned previously, this matches telecommunication companies increasing investment in software-based networks and AI software.

Figure 4: Our proposed figures show similar growth investment to the that of the Office for Communications (OFCOM) from 2019 to 2023

Comparison of our proposed methodology for market sector digital infrastructure investment against external estimates, current prices, 1997 to 2025, UK

Notes:

1. As shown by the chart annotation, OFCOM figures from 2023 onwards are not directly comparable with previous years’ data.

Figure 4 shows an updated comparison of our proposed estimates of market sector digital infrastructure investment against estimates produced by other organisations.

More detail on GI HUB's and Ofcom's methods can be found in our Redefining investment in digital infrastructure in the UK: 2024 article.

In contrast, our estimates are derived from national accounts data on GFCF and cover a broader set of industries, including telecommunications (SIC 61) and data processing and hosting activities (SIC 63.1). This allows us to capture a wider range of digital infrastructure assets, including data centres and associated computing infrastructure.

Overall, our proposed figures continue to compare well against those of other organisations. Differences between the series in more recent years may reflect both methodological changes in Ofcom's data collection and the broader coverage of our estimates, particularly where investment is increasingly caused by assets such as data centres and other hardware‑intensive infrastructure. However, all series show a fall in digital investment in the most recent periods measured.

Table 1 shows which sector funded investment in digital infrastructure and who owns the resulting assets in 2024, the latest year for which both government and market sector data are available. Details on how market sector investment in digital infrastructure was calculated are available in Section 5: Market sector digital infrastructure investment.

Capital formation by the government sector was £94 million in 2024, while it provided £0.7 billion in investment grants to the market sector, representing 5.7% of total market sector investment. In contrast, the market sector undertook £11.6 billion of investment in digital infrastructure, of which £11.0 billion was self-funded.

Summary

Under an expanded definition of digital infrastructure, market sector investment in 2025 was £11.2 billion, higher than the £3.6 billion suggested by our existing limited approach.

The difference largely reflects an improved and broader measurement scope compared with our current focused approach. The existing methodology remains appropriate for measuring physical communications infrastructure, but it takes a narrower view by focusing mainly on investment in these structures as infrastructure investment. Our expanded definition captures a wider range of assets that support the emerging digital infrastructure, including hardware within data centres, software and other related assets.

We also find that government support for digital infrastructure is often delivered through grants to the market sector, such as Project Gigabit and the Shared Rural Network, rather than through direct ownership of communications assets.

Future measurement challenges

As investment in artificial intelligence (AI) accelerates, we need to ensure we are in the best position to provide understanding of how data centres contribute to economic activity, productivity growth and changes in labour demand across industries. Measuring these impacts presents challenges, particularly where the benefits of AI will emerge over time or are captured within intangible assets and digital services rather than traditional forms of capital.

A further challenge is the ownership of data centres across multiple Standard Industrial Classification (SIC) divisions. As discussed in our Data centres and the UK National Accounts methodology, in our business surveys, a reporting unit is classified to a SIC based on its dominant activity. For example, in the case of a real estate company owning data centres, the reporting unit would be classified to real estate activity. This scenario would not be captured in our current analysis given our focus on the two industries: 61 – telecommunications and 63.1 – data processing, hosting and related activities; web portals.

A final consideration is the role of price changes on investment in the assets that underpin our market sector estimates. In a future article, we plan to present our market sector estimates with price effects removed to show the underlying changes in digital infrastructure investment.

These developments point towards several areas where further measurement and analysis will be required. The emerging AI thematic account we are planning as part of our Surveys and Economic Statistics Improvement Plan provides one potential framework for tracking AI-related investment, production and use across the economy, while helping to assess the role of supporting infrastructure such as data centres.

Infrastructure assets 

Infrastructure assets are fixed capital assets that provide the underlying networks, systems and facilities that support economic and social activity. Examples include transport networks, energy systems, water and sewerage infrastructure, communications networks, and other assets that enable the movement of people, goods, information or services. Infrastructure assets typically have an economic life of more than one year and generate services over multiple periods.

General government 

In paragraph 2.111 of the European System of Accounts (ESA) 2010 framework, the general government (GG) sector (S.13) is defined as consisting "of institutional units which are non-market producers whose output is intended for individual and collective consumption, and are financed by compulsory payments made by units belonging to other sectors, and institutional units principally engaged in the redistribution of national income and wealth."

Market sector 

The market sector is defined as the whole economy, excluding all government and the non-profit institutions serving households (NPISH) sectors. In relation to digital infrastructure, it covers industries 61 – telecommunications and industry 63.1 – data processing, hosting and related activities; web portals. For more details on the industries used to estimate total market sector investment in all types of infrastructure, see Section 7: Glossary of our Infrastructure in the UK, investment and net stocks: July 2026 article. 

Data centre

The physical facilities, primarily dedicated buildings, that house computing infrastructure (servers, storage, and networking equipment), typically used to deliver processing power for AI, cloud computing, and server hosting.

Artificial intelligence (AI)

Capabilities of a computer program, or system controlled by a computer program, of recognition, reasoning, communication, and prediction emulating human recognition, reasoning, and communication.

Thematic account

A thematic account provides complementary data that allows for important insights into an activity or aspect of an economy that lacks visibility in the integrated framework of the national accounts. A thematic account disaggregates and rearranges the items in the integrated framework of the System of National Accounts to provide that visibility, while remaining consistent with the principles of the core national accounts framework. Previously included under satellite accounts alongside what are now referred to as extended accounts.

Data sources

Our data sources are:

• annual gross fixed capital formation by industry and asset – definition by asset (other structures) and industries

• general government annual expenditure: ESA Table 11 – definition by classification of the functions of government (COFOG)

Official statistics in development

These statistics are labelled as "official statistics in development".

We are developing how we collect and produce the data to improve the quality of these statistics. Once the developments are complete, we will review the statistics with the Statistics Head of Profession. We will decide whether the statistics are of sufficient quality and value to be published as official statistics, or whether further development is needed. Production may be stopped if they are not of sufficient quality or value. Users will be informed of the outcome and any changes.

We value your feedback on these statistics. Please email nfa-development@ons.gov.uk.

More quality and methodology information

More quality and methodology information on strengths, limitations, appropriate uses, and how Infrastructure in the UK data is created is available in our Infrastructure in the UK, investment and net stocks QMI.

We intend to include figures consistent with the expanded definition of digital infrastructure in future editions of our Infrastructure in the UK, investment and net stocks article. We will include this once an international consensus on measuring infrastructure assets is reached, via the Organisation for Economic Co-operation and Development's (OECD's) informal expert group on measuring infrastructure. We will apply the changes discussed here to estimates of net stocks of infrastructure, as well as produce estimates in both current and constant prices.

We will also explore whether additional digital infrastructure assets should be incorporated into future estimates. This includes elements currently not captured within our methodology, such as components of the "other machinery and equipment" asset class that support data centre operations, including cooling systems, power distribution equipment and server racks. Including these would go towards capturing a fuller picture of data centres in the UK. Further, we will consider if other industries hold significant digital infrastructure assets, for example, industry 62 - computer programming, consultancy, and related activities, as discussed in our Data centres and the UK National Accounts methodology. These are not currently considered in either our headline or expanded measures. 

We welcome all feedback from stakeholders on these proposed changes to our methodology, particularly regarding the asset classes we have included within our expanded definition, and the proportions of each asset class we intend to include in our headline infrastructure publication.