Google’s parent company Alphabet has announced a £5 billion investment in the UK, focusing on artificial intelligence infrastructure and scientific research over the next two years.

The commitment was confirmed as the technology giant officially opened its first owned and operated data centre on UK soil, located in Waltham Cross, Hertfordshire. Chancellor Rachel Reeves joined Google executives at the launch, describing the move as a “vote of confidence” in the UK economy.

The new facility, costing around $1bn (£735m), will form part of a wider expansion of Google’s UK operations, including investment in London-based DeepMind. Founded in the English capital and led by Nobel Prize winner Sir Demis Hassabis, DeepMind applies AI to accelerate scientific and healthcare research.

Reeves said: “Google’s £5billion investment is a powerful vote of confidence in the UK economy and the strength of our partnership with the US, creating jobs and economic growth for years to come.

“This government is reversing decades of underinvestment that has held us back for too long, by slashing burdensome red tape, delivering bold reforms of the planning system and investing in better tech to unlock better jobs and opportunities. Through our Plan for Change we are building an economy that works for, and rewards, working people.”

Google has stated that the investment will contribute to the creation of thousands of jobs, estimating 8,250 roles annually at UK businesses. Around 250 companies, many local to Waltham Cross, worked on the construction of the new site.

Ruth Porat, Google’s chief investment officer, said in an interview with the BBC that the potential economic impact of AI in Britain could be worth £400bn by 2030. She added: “Google’s investment in technical infrastructure, expanded energy capacity and job-ready AI skills will help ensure everyone in Broxbourne and across the whole of the UK stays at the cutting-edge of global tech opportunities.”

The company has also emphasised the environmental design of the data centre. Porat explained the facility would be air-cooled rather than water-cooled, with waste heat “captured and redeployed to heat schools and homes.” Google has signed a deal with Shell to supply “95% carbon-free energy” for its UK investments.

Hassabis, co-founder and chief executive of DeepMind, said: “We founded DeepMind in London because we knew the UK had the potential and talent to be a global hub for pioneering AI. The UK has a rich history of being at the forefront of technology – from Lovelace to Babbage to Turing – so it’s fitting that we’re continuing that legacy by investing in the next wave of innovation and scientific discovery in the UK.”

The UK announcement comes during a week of heightened attention on transatlantic investment, coinciding with the state visit of US President Donald Trump. Further multi-billion-dollar UK commitments from other US technology firms are expected in the coming days. Reports suggest that OpenAI and Nvidia are preparing to unveil major UK data centre projects alongside Google’s expansion.

Alphabet’s move also follows significant developments in global markets. On Monday, the company became the world’s fourth to exceed a $3 trillion valuation, joining Nvidia, Microsoft and Apple. Google’s share price has risen sharply in recent weeks, buoyed by US court decisions not to order a breakup of the company.

While the new UK investment represents a strategic boost for the government, it also comes against the backdrop of ongoing debates over the energy demands of AI infrastructure. In the US, the Trump administration has suggested a possible return to carbon-intensive power sources to meet data centre requirements.

Google’s UK project began with a planning application in 2018, when a now-defunct company named STX-10 submitted proposals to transform a 33-acre field in Broxbourne. Google acquired the land in 2020 for £55m, later progressing with construction estimated at £800m.

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The Waltham Cross site will bolster Google’s position in the UK cloud market, where it currently trails Microsoft and Amazon, each thought to control up to 40% market share according to regulators. Broader demand for capacity is accelerating: in 2024, the number of UK data centre planning applications rose by 40% year-on-year, as companies scrambled to add compute power for AI workloads.

Other firms are following suit. Blackrock has committed £500m to UK data centres, and analysts suggest the flow of investment has contributed to a strengthening of the pound in recent weeks, alongside expectations of changes to interest rates.

The government will be hoping Google’s investment provides momentum after the withdrawal last week of healthcare company Merck from a planned £1bn research facility in London. With Trump expected to bring senior ministers and US technology executives, including Sam Altman of OpenAI and Nvidia’s Jensen Huang, to Chequers later this week, further announcements are anticipated.