As the Strait of Hormuz remains a focal point, businesses turn to AI for resilience and growth.
Category: Business
In a world where water is the lifeblood of both human existence and economic stability, recent developments have brought the significance of this precious resource into sharp focus. The UK’s economic future is now intricately tied to the contested waters of the Strait of Hormuz, a narrow passage that has become a flashpoint for geopolitical tensions, particularly between the US and Iran. With warnings from the Bank of England of a potential ‘major supply shock,’ the implications for the UK economy are dire. The International Monetary Fund (IMF) has forecast that the UK will be the hardest hit among advanced economies by this impending turmoil, prompting businesses to brace for a ripple effect on consumer confidence and spending.
As UK businesses navigate this uncertain terrain, many are looking to artificial intelligence (AI) as a potential lifeline. A recent report from accountancy firm PWC revealed that a staggering 74% of AI’s economic value is concentrated within just 20% of organizations. This disparity highlights a growing divide between ‘AI leaders’—those companies successfully leveraging AI—and the majority still hesitating at the starting gate, caught in what has been termed ‘pilot mode.’
At the forefront of this technological shift is Veolia, a global leader in environmental services, which recently showcased its ambitions at the Outernet exhibition space in London. Veolia’s CEO, Estelle Brachlianoff, announced the company’s goal to generate €1 billion in annual revenue from data centres and chips by 2030. This strategic pivot reflects a recognition of the increasing demand for data centres, which are projected to triple in number by 2030. Brachlianoff emphasized the urgency of addressing resource constraints, particularly concerning water and energy, as these are foundational to the operation of data centres.
According to Veolia’s estimates, the water consumption of data centres and semiconductor manufacturing could equal that of 46 million people by 2030—about the size of the metropolitan areas of New York, Los Angeles, and Paris combined. This staggering statistic raises questions about the sustainability of such growth. Brachlianoff pointed out that around 50% of the cost basis of AI stems from water and energy consumption, making it imperative for companies to innovate in resource management.
Veolia is already making strides in this arena, collaborating with various data facilities worldwide to transform them into carbon-neutral, ‘water-positive’ hubs. A notable example is Amazon Web Services, which plans to switch its Mississippi data centre entirely to recycled water by 2027, utilizing treated sewage to minimize its environmental footprint. This approach addresses water scarcity and aligns with a burgeoning trend of ‘water as a service’ (WaaS), which seeks to balance resource usage with community needs.
As the UK grapples with these challenges, the government has also introduced a new Industrial Strategy aimed at fostering sustainable growth across eight priority sectors. Published in 2025, this ten-year plan recognizes the pressing issues of inflation, high energy costs, global competition, and skills shortages that threaten the industrial engine of the nation. Schneider Electric, a major player in energy management, has been vocal about the need for widespread electrification to provide cheaper, cleaner, and more secure energy for both industry and households.
The strategy emphasizes the importance of a smarter, decentralized grid network to facilitate energy access and distribution. This shift is not merely a technological upgrade; it is a necessary evolution to meet the energy demands of a rapidly changing industrial environment. With increased funding for research and development, as well as reforms to planning policies, the government aims to bolster business investment and support key growth sectors.
Yet, the road ahead is fraught with challenges. The UK’s high energy costs and persistent skills gaps remain substantial barriers to progress. Schneider Electric has highlighted the need for reforms to the existing apprenticeship levy scheme and increased investment in technical training to equip the workforce with the skills necessary to thrive in a digital-first economy. Without addressing these issues, the ambitious goals of the Industrial Strategy may remain unattainable.
Digital technologies are not just a supplementary aspect of this strategy; they are central to its success. The integration of AI, automation, and smart monitoring systems can lead to substantial gains in productivity and sustainability. For example, Schneider Electric has reported energy cost reductions of 10% to 30% through the implementation of industrial IoT solutions across its global supply chain. Such advancements demonstrate the potential of digital technologies to drive efficiency and reduce emissions, aligning with the UK’s decarbonization goals.
As the UK economy faces the dual pressures of geopolitical tensions and domestic challenges, the emphasis on AI and sustainable practices could provide a pathway to resilience. Businesses are increasingly recognizing that the future is not just about technology but also about managing resources wisely. The interplay between water, energy, and AI will be a defining feature of the coming years.
In the face of uncertainty, the actions taken by businesses and the government now will have lasting implications. The Industrial Strategy’s focus on sustainable growth and the role of AI in driving economic value will shape the UK’s industrial future. The question remains: will the nation’s industries rise to the occasion, leveraging technology and resource management to navigate the storm ahead?
As we look to the future, the balance between innovation, sustainability, and economic stability will be more important than ever. The interconnectedness of water, energy, and technology presents both challenges and opportunities, and how the UK responds could set a precedent for other nations facing similar dilemmas.