Amazon invests £8.5bn in UK, a godsend for government

The American tech giant Amazon will invest 8 billion pounds (9.5 billion euros) in the “cloud” in the United Kingdom, a windfall as colossal as it is welcome for the new Labour government, eager to prove itself on the economic front.

This good news comes at a time when the new Prime Minister Keir Starmer is facing criticism, after the announcement that his first budget, expected on October 30, would be “painful” with probable cuts in public spending and tax increases.

This investment over 5 years, which is not the first of such magnitude on the European continent, should make it possible to “support around 14,000 jobs” per year, Amazon anticipates in its press release.

It should also contribute, still according to Amazon, to the tune of 14 billion pounds sterling to the gross domestic product (GDP) of the country until 2028.

This announcement “marks the start of the economic recovery and shows that Great Britain is a good country in which to do business”, welcomed the Finance Minister Rachel Reeves said in a statement.

But “I'll be honest with the British people: change won't happen overnight,” she added.

British Chancellor of the Exchequer Rachel Reeves, during a visit to the National Manufacturing Institute Scotland (NMIS), in Glasgow, on August 28, 2024 © POOL – ANDY BUCHANAN

The British government, which has made the revival of growth its priority, is counting in particular on the creation of a “national sovereign fund”, which will be replenished with 7.3 billion pounds (8.7 billion euros) over five years, to boost investment in the country.

But the Labour majority must deal with public finances in dire straits: public debt is flirting with 100% of gross domestic product (GDP), a consequence in particular of aid distributed during the Covid pandemic and the energy crisis. The public deficit is slipping.

And while the executive blames previous conservative governments for this hole in the coffers, it is nonetheless under pressure from unions and its own ranks to loosen the purse strings and get public services back on their knees or reverse its decision to end an energy check for some ten million retirees.

– Delay in AI –

The investment announced Wednesday will be provided by Amazon Web Services (AWS), the giant's subsidiary dedicated to the “cloud”, to build, operate and manage the maintenance of data centers in the United Kingdom.

The group, which employs 75,000 people in the country on more than 100 sites, specifies in its press release that it has invested 56 billion pounds in the United Kingdom between 2010 and 2022.

AWS has been announcing massive investments in Europe for several months: nearly 18 billion euros in Germany, 15.7 billion in Spain and 1.2 billion in France © AFP – ALAIN JOCARD

AWS has been announcing massive investments in Europe for several months: nearly 18 billion euros in Germany, 15.7 billion in Spain and 1.2 billion in France.

These investments come at a time of intense debate within the EU on the issue of the “European sovereign cloud”, which should allow data to be stored and processed online without going through American technology giants.

Amazon is also investing elsewhere in the world, such as in Singapore, where the company announced in May an investment representing the equivalent of 8.3 billion euros on the next four years.

The group announced last month that it had doubled its quarterly profits, driven by the cloud, in which it is the world leader, and AI. AWS revenues, in particular, rose 19% to $26.3 billion in the second quarter.

While Amazon has fallen behind the two other giants in the sector, Microsoft and Google, in generative AI, the cloud is essential in the deployment of these tools for businesses and individuals, hence massive investments in new ad hoc data centers.

All reproduction and representation rights reserved. © (2024) Agence France-Presse