LONDON (Reuters) -Spending on new UK data centres is set to rise to 10 billion pounds a year by 2029, a more than five-fold increase from 2024, analysis by construction data firm Barbour ABI has found.

A total of 1.75 billion pounds was spent on data centres in the UK last year, with 2.38 billion forecast to be spent in 2025.

AI-driven demand is fuelling data centre investment. Tech giants are seen investing 25 billion pounds into the UK over the next five years, Barbour ABI found, and almost 100 new data centre projects are planned.

Growth is being supported by government initiatives such as AI Growth Zones which aim to streamline the planning process for new digital infrastructure.

London and surrounding areas have traditionally dominated the data centre sector, but development is increasingly expanding nationwide, according to Barbour ABI.

The largest planned UK data centre project is a $13 billion "hyperscale" data centre in North East England, proposed by U.S. private equity group Blackstone.

Last month, Britain and the United States agreed a technology pact with top U.S. firms including Microsoft ( MSFT ), Nvidia ( NVDA ) and Google, among those pledging investments in the UK.

Global data centre demand and planned projects have surged since ChatGPT was released in late 2022, as big money and governments bet generative AI will revolutionise the way we work and live.