Wednesday 02 September 2026 3:26 pm  |  Updated:  Wednesday 02 September 2026 3:27 pm

A Gulf Trade Agreement could accelerate UK data centre development

By: The Business Year

A newly inked trade agreement between the UK and Gulf region offers tantalizing potential for collaboration as the race to build data centres heats up.

Data centres, like Amazon warehouses before them, are simultaneously springing up everywhere, vital to current consumer and business trends, and wildly unpopular with the public.

But despite these objections, the construction of data centres is unlikely to slow down. Nations are competing for early AI advantage, which requires the kind of computing power that only vast facilities can provide.

Crucially, a newly signed trade deal is set to stimulate cross-border investment in digital infrastructure in both the UK and the Gulf.

UK-GCC Free Trade Agreement: Sparking cross-border data centre growth?

The UK-GCC Free Trade Agreement was concluded in May 2026, marking a significant new stage in economic relations between the UK and the Gulf and one of the most significant trade deals signed by post-Brexit Britain.

For the data centre industry, the most interesting part may not be the headline tariff reductions, but the agreement’s treatment of data.

The FTA commits the UK and Gulf Cooperation Council (GCC), an economic alliance that includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, to facilitating cross-border data flows and prohibits unjustified data-localization requirements, meaning Gulf data will be stored in the UK more easily, and vice versa.

Most GCC countries are investing heavily in data centres as they integrate AI into their diversification plans. Speaking in May, then Minister of State for Trade Chris Bryant said the free trade agreement responded to this shift by “including commitments designed to support digital business.”

Gulf Data Centre Capacity & Regional Expansion

Saudi Arabia, the UAE, and Qatar, the GCC data centre leaders, together had an estimated 1.06GW of installed data centre capacity in 2025, according to the MENA Energy Outlook 2026. The same forecast puts their combined capacity at more than 2GW by 2028, with AI-specific capacity rising from 205MW in 2025 to 534MW.

Saudi Data Center Capacity in MWs

The scale of Saudi Arabia’s expansion is especially stark. The Kingdom’s conventional data centre capacity reached approximately 440MW in 2025, recording annual growth of more than 50%, according to the Saudi Ministry of Communications and Information Technology. And the Saudi government expects capacity to reach approximately 1.3GW by 2030. By contrast, current UK data centre capacity stands at ~2GW.

This all creates an obvious opportunity for UK companies. Data centres require far more than servers: engineering, cooling, power management, cybersecurity, financial services, legal expertise, construction, specialist real estate, renewable energy, and digital infrastructure are all part of the ecosystem.

Boosting Data Centre Investment in the UK

Britain already has one of Europe’s deepest data centre markets. London alone has more than 5GW of total data centre supply across live, construction, committed, and early-stage capacity, according to DC Byte, a global data centre research firm. It is the largest colocation market in Europe by built IT power. But the UK faces its own constraints. Data centres are highly electricity intensive, at a time when energy bills are a political hot potato. Land availability is also scarce, adding another challenge as local opposition regularly leads to planning delays.

Meanwhile, Saudi Arabia and the UAE have ambitious development programs, access to cheap energy, and near abundant cash.

In Saudi Arabia, the government offers electricity tariffs for qualifying cloud computing data centres as low as USD0.048 per kWh. That is more than six times cheaper than average electricity prices in the UK.

Top-down governance and fewer civil society mechanisms for public pushback mean projects in the Gulf can also move forward at lightning speed.

Thomas Pramotedham, CEO of Presight, a G42-backed AI and big data analytics company headquartered in Abu Dhabi, told The Business Year that, “The abundant energy natural resources and robust grid has made the UAE a strong stakeholder in the AI era. The nation [is] able to build a 5GW data centre because it has the land, climate, energy, and capital behind it.”

Under the free trade agreement, and worryingly for anti-data centre campaigners, Gulf cash could be unleashed on the UK market, while the UK provides technology, expertise, professional services, and experience operating sophisticated digital infrastructure.

In practical terms, a UK financial technology company may be able to serve Gulf customers while relying on a combination of UK and Gulf computing infrastructure. A Saudi AI business could potentially use British software, professional services, or cloud infrastructure while expanding internationally.

The UAE already provides an example of the investment link. Between 2020 and 2025, it attracted an estimated $4.64 billion in greenfield FDI into ICT and internet infrastructure. The UK accounted for around $466 million of that investment across three projects, according to Emirates NBD Research.

Boost for post-Brexit trade

Beyond data centres, the wider economic benefits of the UK-GCC Free Trade Agreement are also substantial. The UK government estimates that the agreement could grow the UK’s economy by £3.7 billion a year in the long run, while UK exports to the GCC could eventually rise by £14.3 billion a year, or 22.6%, against projected 2040 trade levels. Around 93% of UK goods exports to the GCC, based on existing trade, are expected to become tariff-free after full implementation.

The free trade agreement is not yet in force, with implementation expected to take several months. Senior government and business leaders will meet in London on October 20 for the UK-GCC Strategic Dialogue to advance the treaty and establish implementation timelines.