Shifting geopolitical, technological, and legislative pressures mean 2026 is forecast to be a key year for cloud strategy in the UK as repatriation gains mainstream traction. The trend is already accelerating, with a greater focus on data sovereignty due to growing concerns.
According to insight from Pulsant, a UK-based digital edge infrastructure provider, 2025 saw businesses reevaluate cloud adoption due to increased regulatory pressures and higher costs, with many organisations shifting their workloads to private cloud, colocation, or on-premise deployments, from public cloud. The main objective has been for businesses to improve cost efficiency, overall compliance, and gain greater control.
Cloud key, but hybrid models are the future
While the cloud remains a important component of modern IT infrastructures, a hybrid approach is emerging as the long-term direction for enterprise IT strategies.
Many UK businesses are moving their workloads from global hyperscalers to domestic providers, resulting in hybrid infrastructure models, particularly as data sovereignty continues as a crucial concern. According to recent research, 87% of UK businesses are planning to repatriate a percentage, if not all, of their workloads over the coming two years.
Forecasters predict businesses will prioritise data locality, sovereignty, transparency, and visibility in 2026 through a hybrid infrastructure. However, there may be challenges lying in wait as static infrastructure starts to make way for this modern mixed environment.
Threats to hybrid infrastructures
Throughout 2025, there have been a run of cyber-security breaches throughout UK organisations, like the high-profile M&S system compromise. Therefore, businesses are now more aware of how and where data is stored, particularly in their supply chains.
That being said, many businesses still lack full visibility into where their data is stored, processed, and how it is backed up, thus leading to a renewed focus on resilience. The key is to generate methods that can recover from security breaches quickly, not solely concentrating on prevention.
Data centre policies and services are expected to be heavily influenced by such changes over the next year, making disaster recovery and backup standard features highly important. We are already seeing UK data centre providers responding with clearer, more compliant platforms, offering customers improved visibility and a more secure infrastructure.
Policies challenge and support data centre sector
Throughout 2025, new government policies and bills have been introduced, both helping and hindering the data centre sector. For instance, the effects of the Cyber Security & Resilience Bill, established to “improve UK cyber defences and protect our essential public services”, will be seen as its laws begin to influence how businesses operate, shaping security standards in the industry. Yes, stronger cybersecurity measures and clearer regulations will be present, but this may also increase reporting procedures, potentially leading to added workloads for organisations.
Fast-track planning laws for data protection construction, particularly those classed as Nationally Significant Infrastructure Projects (NSIPs), have made the approval process quicker and easier. However, with this support comes challenges as section 106 planning obligations can still require developers to provide additional funding for local communities and services, adding extra cost.
These policies, being simultaneously beneficial and complex, could provide opportunities and uncertainty for UK businesses. 2026 will present the real-world impacts of these revisions, which may benefit well-prepared, security-focused organisations, but also delay some projects.
AI hype settles or soars in 2026
Interest in AI technologies soared to new heights in 2025, with AI-powered data centre demand surging, particularly in hyperscale settings. 2026 should see the AI hype start to settle as businesses reevaluate real-world AI use, discovering digital infrastructures that align with AI goals.
Concepts like sovereign AI and inference AI will be involved during these processes, resulting in a more complex landscape. However, edge computing is expected to emerge as a key technology to support these needs over the next year.
Edge computing to offer more stable, regional infrastructure
According to Rob Coupland, Chief Executive Officer, at Pulsant, more Edge data centres will be constructed near major UK cities in 2026. “In 2026, we’ll see increased availability of Edge data centres near UK metros, opening up new opportunities for sectors like smart manufacturing and transport. The regional edge facilities will offer more sustainable, cost-effective infrastructure, contributing to a more balanced national digital economy.”
It comes as little surprise that London and the South East are predicted to maintain a dominant standing in the UK data centre market, but regional locations saw increased interest in 2025. This was pushed by certain government initiatives, like the AI Growth Zones project, set up to encourage greater investment across the country.
The data centre sector enjoyed increased focus during 2025 and this trend of change is anticipated to continue in 2026 and beyond. Data centres are playing increasingly pivotal roles in supporting society and industries in the UK, but it’s the data centre providers who prioritise regional diversification and transparency that will have a competitive advantage over the next twelve months.
(Image source: “Northern Ireland Coast” by Radu Micu is licensed under CC BY-NC-SA 2.0.)
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