Microsoft Exits UK's Largest AI Data Centre Project as Nscale Vows to Press On

Microsoft has terminated its involvement in the UK's largest planned AI data centre, withdrawing from a flagship project in Loughton, Essex, that had been positioned as a cornerstone of Britain's ambitions to become a global artificial intelligence hub. The decision deals a significant blow to the country's AI infrastructure buildout at a time when hyperscalers and governments are racing to secure computing capacity.

Nscale, the AI cloud provider behind the £2 billion development, confirmed that Microsoft — which had committed to funding a supercomputer at the site — has ended its participation. The BBC understands the withdrawal was communicated to Nscale in recent days. A Microsoft spokesperson declined to comment on the matter.

Despite the setback, Nscale said it remains fully committed to the Loughton project and to the UK market. "We remain committed to both the Loughton project and the UK and we are exploring alternative power sources for the site, in addition to other expansion sites in the UK," a Nscale spokesperson said. "Our relationship with Microsoft remains strong and long-term." The company added that its partnership with Microsoft continues on projects in Norway, Portugal and the United States.

The project had already encountered headwinds before Microsoft's exit. The Loughton data centre was due to receive its power supply at the end of this year, but Nscale has been informed that grid connectivity will not be available until the 2030s, according to The Telegraph, which first reported the delay. Nscale described the situation as "this unfortunate London-wide grid issue" and said it has no impact on its other contracts. The company is now exploring alternative power sources for the site.

The withdrawal marks a notable reversal for Microsoft, which only last month announced that a portion of the $30 billion it is investing in the UK would be allocated to funding the Loughton supercomputer. The project, announced by Nscale last year with a £2 billion pledge, was expected to create 250 permanent jobs once operational and was widely regarded as a catalyst for the UK's AI ecosystem. The grid delay and Microsoft's departure raise broader questions about whether the UK's energy infrastructure can keep pace with the rapid expansion of AI data centre capacity, a challenge increasingly confronting European markets where power availability has become a binding constraint on digital infrastructure growth.