Digital investment nearly doubles since 2019 yet AI’s growth contributions questioned
Investment in digital infrastructure has nearly doubled in the space of just five years official data has shown even as economists question whether recent gains in productivity are down to artificial intelligence.
A revision of how digital infrastructure spending is calculated by the Office for National Statistics (ONS) has suggested that business investment in digital infrastructure has surged from £6.3bn in 2019 to about £11.6bn in 2024.
The official data body said a new estimate for spending on digital infrastructure includes data centres, software to run IT, cables and other digital infrastructure, bringing the UK in line with standards in other major economies.
While ONS officials said they were unable to pull out exact figures on investments in data centres due to issues with grouping assets, they suggested that the wider boost in investment reflected the “growing importance” of centres.
Buildings, softwares and databases made up about 77.6 per cent of investment in digital infrastructure between 2020 and 2025, according to data collectors.
In 2025, it is estimated that investment in a group of assets that includes data centres and fibre optic cables summed up to £5.6bn, increasing by about 94 per cent since the start of the pandemic.
It was also noted in a new release on digital spending that around 171 data centre construction projects tracked by Barbour ABI could further quadruple current investment levels in data centres by 2030.
The ONS revised its calculations as part of an effort to better track AI-related investment. Statisticians highlighted business surveys suggesting that more than a third of businesses with 10 or more employees were adopting AI in 2026, thereby boost investment in digital infrastructure.
But leading City economists have warned that the new technology has not appeared to be the driving force behind higher growth despite optimism that the UK’s productivity is on track to beat trends in previous years.
Analysts at the left-leaning think tank Resolution Foundation, Wall Street bank Morgan Stanley and the London School of Economics have separately argued that the UK is enjoying a productivity “boom”.
The Resolution Foundation said that, based on payroll data rather than the ONS’ unreliable labour force survey measure, productivity has been expanding by 1.1 per cent a year since late 2024.
This compares to an estimate of 0.2 per cent made by the ONS.
AI boom not leading to ‘material headcount reductions
Morgan Stanley researchers said private sector productivity in the second quarter of the year was at 1.8 per cent over a 12-month period.
Yet the consultancy Pantheon Macroeconomics warned clients that there was “little evidence” to suggest that AI was making workers produce more output each hour.
While surveys have shown that AI adoption is increasing, economists Rob Wood and Elliott Jordan-Doak said that the same data showed AI was not translating into “material headcount reductions”.
“The bulk of businesses in [a Bank of England survey] say AI has had ‘no material impact’ on headcount over the past three years, while the proportion of firms in the Business Insights and Conditions survey (BICs) cutting jobs because of AI remains low and stable,” a note by Pantheon said.
“We also see little relationship between AI adoption and either vacancies or payrolled employment. The equivocal results on vacancies and jobs likely reflect in part increased use of AI boosting the demand for some workers, as well as replacing some jobs.”
Wood and Jordan-Doak said they believed “big changes are afoot beneath the surface” for some workers although recent productivity gains “may not yet be the start of a sustained trend”.