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OpenAI halts North East data centre project
OpenAI has suspended its Stargate UK initiative, which included plans for a major data centre at Cobalt Park in North Tyneside, citing high energy costs and regulatory uncertainty as key obstacles.
Reactions from local leaders
The North East Combined Authority (Neca) acknowledged the setback but stressed the region's continued commitment to attracting investment. A Neca spokesperson described the pause as "disappointing" but attributed it to "national challenges around energy pricing and regulatory certainty," rather than any lack of regional potential.
"The North East remains one of the UK's designated AI Growth Zones, with strong assets in power, land, skills, and applied innovation," the spokesperson added. "Our direction has not changed."
Political and industry responses
Chi Onwurah, Labour MP for Newcastle Central and West and chair of the Science and Technology Committee, called the decision a "blow" during an interview on BBC Radio 4's Today programme. She criticised the initial announcement last September-made during former U.S. President Donald Trump's state visit-as "very long on ambition and short on detail."
Onwurah supported the government's push to position AI as a driver of economic growth but warned that the UK's reliance on U.S. investment was "too great." She noted that while the Labour government had taken steps to reduce energy costs for energy-intensive industries like AI, further action was needed.
"There are certainly some problems in the OpenAI business model, and the energy spike as a consequence of the Iran war is a global issue,"
Chi Onwurah, MP
Government response and broader context
A government spokesperson highlighted the UK's AI sector achievements, stating it had attracted over £100 billion in private investment since Labour took office. The spokesperson emphasised that these investments were delivering jobs and opportunities for workers.
Originally announced in September 2025, the Stargate UK project aimed to enhance the UK's "sovereign compute capabilities" and support domestic AI development. OpenAI stated it would only proceed when "the right conditions" for long-term infrastructure investment were met.
Regional outlook
Despite the pause, Neca affirmed its openness to business and collaboration with the government to address barriers. The authority reiterated the North East's strategic advantages, including its designation as an AI Growth Zone and its robust infrastructure.
