If you zoom out, 2025 was the year the North East’s digital story became less about catching up and more about building capacity—especially in AI, data centres, and the skills and connectivity needed to support them.
The biggest symbolic moment landed in September 2025, when the region secured UK Government backing for a North East AI Growth Zone, positioned around large-scale data centre development and thousands of jobs.
That announcement matters because it changes how investors, suppliers, universities, and training providers plan: it’s not just “more tech companies,” it’s “hard infrastructure + compute + power + land + talent pipelines.”
What changed across the North East in 2025
1) AI became the organising theme (not just a buzzword)
The AI Growth Zone narrative gave the region a clearer “north star”: attract compute-heavy investment, accelerate AI use in industry and public services, and create new tech career pathways locally. The North East Combined Authority framed it as a major investment and jobs opportunity, tied to existing sites such as Cobalt Park and Blyth/Cambois. NECA+1
At the same time, Teesside’s national visibility rose with reporting around major AI/data-centre ambitions at Teesworks—and the practical reality that data centres bring planning, power, and water questions alongside the jobs narrative. Financial Times
What this meant on the ground in 2025:
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More “AI readiness” conversations in councils, NHS-adjacent bodies, colleges, and Growth Hub networks
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SMEs looking for practical AI use (customer service, admin, marketing, forecasting) rather than moonshot R&D North East Growth Hub
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A sharper focus on data governance, security, and responsible deployment (because AI rollout raises risk, not just productivity)
2) Digital adoption improved, but the North East still had a catch-up gap versus the top regions
A UK-wide analysis published in early 2025 highlighted how uneven advanced digital technology adoption remains. It cited AI adoption ranging substantially by region and placed the North East at the lower end in that comparison set. The Productivity Institute
Translation: 2025 likely saw more North East firms experimenting with AI tools, but the region’s challenge wasn’t “awareness”—it was:
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capability (skills and confidence),
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data quality,
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cybersecurity maturity,
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and access to change-support (time, leadership bandwidth, funding).
3) Cybersecurity and “digital trust” moved up the priority list
Two 2025 UK Government publications reinforced the direction of travel:
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The UK cyber security sector continued to grow economically (bigger market = more demand everywhere). GOV.UK+1
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UK employers continued to report cyber skills gaps (basic and advanced), with additional concern about future AI-related security skills needs. GOV.UK+1
Why this matters specifically for the North East in 2025:
As the region talks bigger about AI and data centres, “trust” becomes a local competitiveness factor. Investors and public services both care about whether the region can staff secure operations and meet compliance expectations.
4) Connectivity remained a core enabler (and still a battleground in rural/edge areas)
2025 continued the national push to extend gigabit-capable broadband—especially to harder-to-reach communities—through Project Gigabit. North East England is explicitly included among the underserved areas targeted by new rural broadband contracts discussed in national reporting. The Guardian+1
North East reality check:
Urban cores (Newcastle, Sunderland, Middlesbrough and surrounding) tend to move faster. The harder part is rural Northumberland, patchy valleys, and “not-spot” pockets—where digital inclusion becomes an economic inclusion issue (schools, small businesses, health access).
5) Place-based innovation districts kept maturing (and became more relevant to AI/data)
Innovation clusters like Newcastle Helix continued to position the region for knowledge-economy growth—space for tech/science businesses, collaboration, and talent attraction. Newcastle Helix+1
In 2025, these districts weren’t just about shiny offices; they became more strategically useful as:
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“landing pads” for inward investment teams,
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routes into university talent,
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and collaboration hubs for health, energy, and data-driven innovation.
What I’d predict will change in 2026 (realistically)
1) 2026 becomes the “delivery year” for AI Growth Zone credibility
2025 was about announcement and positioning. 2026 will be about proof:
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planning progress,
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grid/power coordination,
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anchor tenants and supply-chain commitments,
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and visible local hiring/training programmes.
If the region can show concrete milestones, it attracts second-wave investment (SMEs, suppliers, service providers). If it stalls, the narrative risks becoming “press release tech.”
Most likely 2026 shift: more local procurement opportunities tied to data-centre and AI ecosystem build-out (construction tech, facilities, security, networks, compliance, cloud services). NECA+1
2) Skills will move from “digital training” to “AI + cyber + data operations”
Expect colleges, universities, bootcamps, and employer-led training to pivot harder toward:
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AI operations (prompting, evaluation, governance),
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data engineering basics (pipelines, quality, privacy),
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and cyber resilience (secure-by-design, incident response).
Because the UK skills-gap picture is persistent, regions that build practical pathways win. GOV.UK+1
Likely 2026 impact for employers:
More competition for people who can combine domain knowledge (health, manufacturing, logistics) with data/AI fluency.
3) SMEs will split into two groups: “AI-integrated” and “left behind”
In 2025, many SMEs tested tools. In 2026, the advantage shifts to firms that:
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standardise usage (policies, approved tools),
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train staff properly,
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measure ROI,
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and lock down data handling.
Growth Hub guidance is already pushing “from potential to profitability.” North East Growth Hub
2026 prediction: the North East will see a clearer productivity gap between early adopters and businesses still doing everything manually (admin, scheduling, customer comms, stock/forecasting).
4) Connectivity progress continues, but “affordability + skills” becomes the bigger inclusion issue
As gigabit coverage expands, the next constraints become:
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device access,
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affordability of good connectivity,
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and the confidence to use it (especially for older residents and low-income households).
National commentary around broadband rollouts increasingly recognises that infrastructure alone doesn’t close the divide. The Guardian+1
2026 prediction: more local programmes in the North East that bundle connectivity + skills + community support, because the economic case becomes clearer (employment, training, public service access).
5) Public services will scale “small AI” faster than “big AI”
In 2026, expect local public-sector bodies to scale practical uses:
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triage and routing (admin),
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summarisation for casework,
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internal knowledge search,
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basic automation.
But anything involving sensitive decisions (health/social care outcomes) will move slower due to governance and risk. The national direction of travel is to unlock data/AI value, but implementation needs guardrails. Public Service Data Live
Opportunities to watch in 2026 (North East-specific angles)
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Data centres + supply chain: security, networking, facilities, compliance, maintenance, local construction and engineering demand Financial Times
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AI in manufacturing/logistics: the North East’s industrial base is a strong fit for predictive maintenance, quality inspection, and planning optimisation (the “boring AI” that pays back) North East Growth Hub
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Cybersecurity talent pipeline: strong upside if the region builds training routes that meet real employer needs GOV.UK+1
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Innovation districts as magnets: Helix-style clusters are useful for talent attraction and investor confidence Newcastle Helix+1
FAQ (for Google-ready SEO)
Did the North East get a major AI investment in 2025?
Yes—September 2025 brought Government backing for a North East AI Growth Zone, with the region positioned for significant data-centre-led investment and job creation. NECA+1
Is the North East behind on AI adoption?
A UK-wide 2025 analysis suggested the North East was among the lower-adoption regions in the comparison set, indicating ongoing catch-up needs despite growing interest and experimentation. The Productivity Institute
What’s the biggest digital challenge for 2026?
Skills—especially AI + cyber + data operations—and turning big announcements into measurable delivery (projects, jobs, procurement, training pipelines). GOV.UK+2GOV.UK+2