Shifting geopolitical, technological and legislative pressures mean that 2026 is forecast to be a key year for cloud strategy in the UK as repatriation becomes mainstream. The trend is already accelerating, with a greater focus on data sovereignty due to growing concerns.
According to Pulsant, a UK-based provider of digital edge infrastructure, businesses will reassess cloud adoption in 2025 due to increased regulatory pressures and higher costs, with many organizations moving their workloads from the public cloud to the private cloud, colocation or on-premise. The main objective was for businesses to improve cost efficiency, overall compliance and gain more control.
Cloud key, but hybrid models are the future
While the cloud remains an important part 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, leading to hybrid infrastructure models, particularly as data sovereignty continues to be a major concern. According to a recent survey, 87% of UK businesses plan to repatriate a percentage, if not all, of their workload over the next two years.
Forecasters predict that in 2026, enterprises will prioritize data localization, sovereignty, transparency and visibility through hybrid infrastructure. However, problems may be lurking as static infrastructure begins to give way to this modern mixed environment.
Threats to hybrid infrastructures
During 2025, there were a number of cyber security breaches at organizations in the UK, such as the high profile M&S system being compromised. Businesses are therefore now more aware of how and where data is stored, especially in their supply chains.
That being said, many businesses still lack complete visibility into where their data is stored, processed and how it is backed up, leading to a renewed focus on resiliency. The key is to create methods that can quickly recover from a security breach, and not just focus on prevention.
Data center policies and services are expected to be heavily impacted by these changes over the next year, so standard disaster recovery and backup features will be very important. We are already seeing UK data center providers respond with clearer and more compliant platforms that offer customers better visibility and a more secure infrastructure.
The principles challenge and support the data center sector
During 2025, new government policies and laws have been introduced to help and hinder the data center sector. For example, the effects of the Cyber Security and Resilience Act, created to “improve Britain’s cyber defenses and protect our essential public services”, will be seen as its laws begin to influence how businesses operate and shape security standards in the industry. Yes, there will be more stringent cybersecurity measures and clearer regulations, but this may also increase reporting procedures, which can lead to additional workloads for organizations.
Fast-track planning laws for data protection construction, particularly those classified as Nationally Significant Infrastructure Projects (NSIP), have made the approval process faster and simpler. However, with this support come problems as Section 106 planning obligations may still require developers to provide additional funding for local communities and services, increasing costs.
Both beneficial and complex, these policies 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 organizations, but may also delay some projects.
AI hype will level off or skyrocket in 2026
Interest in AI technologies has risen to new heights in 2025, with demand for AI-powered data centers soaring, especially in hyperscale environments. In 2026, AI hype should begin to settle as businesses reevaluate the real-world use of AI and discover digital infrastructures that align with AI goals.
Concepts such as sovereign AI and inferential AI will be involved in these processes, leading to a more complex environment. However, edge computing is expected to emerge as a key technology to support these needs over the next year.
Edge computing offers a more stable regional infrastructure
According to Rob Coupland, CEO of Pulsant, more Edge data centers will be built near major UK cities in 2026. “By 2026, we will see increased availability of edge data centers near UK metros, opening up new opportunities for sectors such as smart manufacturing and transport. Regional edge facilities will offer a more sustainable and cost-effective national infrastructure that will contribute to a more balanced digital economy.”
Unsurprisingly, London and the South East are predicted to retain their dominant position in the UK data center market, but regional locations have seen increased interest in 2025. This was due to certain government initiatives, such as the AI Growth Zones project, which was created to encourage greater investment across the country.
The data center sector enjoyed increased interest in 2025 and this trend of change is expected to continue in 2026 and beyond. Data centers play an increasingly important role in supporting UK society and industry, but it is data center providers that prioritize regional diversification and transparency that will have a competitive advantage over the next twelve months.
(Image source: “Coast of Northern Ireland” by Rad Mic is licensed under CC BY-NC-SA 2.0.)
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