OpenAI rents London office for 544 staff, paused UK data centre plan

OpenAI is renting office space for 544 people in London. It is not building the AI data centers the UK government bet on.

The company signed an 88,500 square foot lease at Regent Quarter in King's Cross on Monday, its first permanent office outside the United States, with capacity to more than double its current 200-person London headcount by the time the space opens in 2027, according to Reuters. Four days earlier, OpenAI confirmed it had paused Stargate UK, a planned network of AI data centers that would have placed thousands of Nvidia graphics processing units across sites in North Tyneside and Northumberland — CNBC reported the pause was citing the cost of energy and the country's regulatory environment.

The two decisions landed in the same week and sent different signals. The office says OpenAI wants to hire in the UK. Stargate UK says OpenAI is not willing to build there. These are not contradictory. They are the company's actual priorities: talent in, compute out.

The £31 billion UK-US AI deal that included Stargate was announced last September during President Trump's second state visit. OpenAI committed to exploring the offtake of 8,000 Nvidia chips at data centers constructed by Nscale, a UK cloud infrastructure company, with the option to scale to 31,000 chips over time, The Register reported. The premise was sovereign compute — letting UK institutions, including parts of government, run frontier AI models on British soil rather than routing requests through servers in Virginia or Texas. In practice it would have put the UK on the map as a genuine AI infrastructure node, not just a research satellite.

That premise is now on hold. An OpenAI spokesperson said the company would move forward with Stargate UK only "when the right conditions such as regulation and the cost of energy enable long-term infrastructure investment," per CNBC. UK industrial electricity prices are among the highest in the world, a problem the US-Israel conflict in Iran has made worse by driving global energy costs upward since the deal was signed. UK regulators have also not resolved whether to change copyright law to allow AI companies to train on published works without explicit permission — a policy question OpenAI has flagged as relevant to its investment decisions.

The government's response has been to note that the UK AI sector has attracted more than £100 billion in private investment since taking office and that the sector grew 23 times faster than the wider economy last year, per technology secretary Liz Kendall, the BBC reported. That is a real number. It is also not the same as having the data centers those investments were supposed to fund.

"The UK has an incredible depth of talent and a strong track record in AI," Phoebe Thacker, OpenAI's London site lead, told the Independent. She is not wrong. London is one of the world's denser concentrations of AI researchers. But talent without compute is a different kind of bet — one that benefits OpenAI's models and its ability to hire in a competitive market, rather than one that builds out the domestic AI infrastructure the UK government was selling when it announced the Stargate deal.

The political exposure is real. Tom Hegarty, head of communications at the tech equity organization Foxglove, put it plainly: OpenAI chief executive Sam Altman is "racking up a record of U-turns any government minister could be proud of," The Guardian wrote, after the recent closure of OpenAI's Sora video product and previous claims that artificial general intelligence would arrive by 2025. Andy Lawrence at the Uptime Institute, a data center industry research group, said all three parties — OpenAI, Nscale, and the government — had reasons not to proceed given rising energy costs and weak demand signals. "The whole sense of urgency has dissipated," he told the Guardian.

Nscale, the UK company that would have built the physical data centers, declined to comment. Discussions between it and OpenAI are still ongoing, according to a person with direct knowledge of the matter, which means the project is paused rather than dead. Whether that matters depends on what "when the right conditions" means — and whether those conditions, particularly UK energy prices and a resolution on copyright law, arrive before the government's AI Opportunities Action Plan runs out of patience.

George Osborne, the former UK chancellor who joined OpenAI in December 2025 to lead its international Stargate expansion, is still on the job — just not in the UK. Nscale has its own political heavyweight: Sir Nick Clegg, the former deputy prime minister, on its board. The infrastructure deal that brought together former British ministers, a US AI lab, and a UK cloud company has not collapsed. It has been deferred. The question is whether deferral is a pause or a quietly managed exit, and who absorbs the cost either way.

The office opens in 2027. The data centers are not going up.