SMEs across the UK and Ireland are increasingly concerned about where their data is stored and the importance of data sovereignty, despite many remaining unsure where their data is hosted.

This is according to new research by team.blue and names.co.uk, which also found a striking differences between the two markets.

For UK SMEs, post-Brexit divergence and the UK’s Data (Use and Access) Act 2025 has put sovereignty at the forefront. The UK’s move to classify datacentres as critical national infrastructure (CNI) in September 2024 made clear its intent to put sovereignty at the heart of its digital economy.

In contrast, Irish SMEs remain anchored in the EU Data Act which came into effect in September 2025. Much like GDPR before it, EU legislation is expected to not only influence European business practices but also shape global standards.

Despite this, more than two-thirds of SMEs in Ireland (68%) admit that they are unsure whether their data is even hosted within EU borders. This lack of visibility underscores a critical knowledge gap that is leaving many firms exposed to both risk and reputational harm.

Global and Customer Pressures

The uncertainty extends beyond Europe. Nearly three-quarters (73%) of SMEs across both markets express concern about their data being stored in the US, reflecting anxiety around trans-Atlantic transfer in light of the US Cloud Act and ongoing debates over adequacy of the EU-US and UK-US frameworks.

These anxieties are also filtering through to wider stakeholders. Respondents report that customers and employees are increasingly raising questions about data location.

Most pressure stems from company directors (14% in the UK and 16% in Ireland) followed by customers (12% in the UK and 14% in Ireland) in both markets.

This shift highlights the commercial stakes: unclear or inconsistent policies on data location can directly undermine customer acquisition, employee confidence and long-term brand loyalty.

“With nearly 6 million SMEs across the UK and Ireland, the fact that a large proportion are operating without clarity on where their data is stored represents a significant challenge – one that touches on compliance, customer trust, and the ability to compete in an increasingly digital economy,” Kwaku Yeboah-Antwi, chief AI and data officer at team.blue said.

Despite raising awareness, decisive action remains limited. In the UK, 30% of SMEs are undecided about switching providers and 42% have no plans to do so.

The picture is similar in Ireland, with 35% undecided and 39% with no plans.

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These figures suggest a strong appetite for clarity, but a lack of practical guidance on what actions should be taken next.

“For UK SMEs, confidence in data sovereignty is becoming a critical business differentiator, shaping not just procurement decisions but also customer trust,” Kelly Salter, commercial director of names.co.uk said.

“The UK’s Data (Use and Access) Act 2025 only reinforces this pressure, underscoring the need for clarity and accountability in how data is handled.

“Education is vital here: without clear understanding of where their data sits, businesses risk falling behind competitors who can offer greater transparency and even exposing themselves to compliance or reputational setbacks.

“Providers that can combine transparency with guidance and support will stand out as true partners of choice.”