Google has started construction on a new $1bn (£789m) data centre in the UK, it has been revealed.

The announcement was made at the World Economic Forum in Davos, where Chancellor Jeremy Hunt has been meeting company bosses as part of a bid to “champion British excellence in tech”.

The new facility is to be located on a 33-acre site at Waltham Cross in Hertfordshire, purchased by Google in October 2020.

The Alphabet-owned company said the centre would boost the growth of artificial intelligence (AI) and “help ensure reliable digital services to Google Cloud customers and Google users in the UK”.

It also revealed that heat generated from the facility would be saved to benefit homes and other businesses in the local community.

Google employs 7,000 people in the UK and said the data centre would add to that figure, initially due to the construction process.

Ruth Porat, president and chief investment officer, said: “The Waltham Cross data centre represents our latest investment in the UK and the wider digital economy at large.

“This investment builds upon our Saint Giles and Kings Cross office developments, our multi-year research collaboration agreement with the University of Cambridge, and the Grace Hopper subsea cable that connects the UK with the United States and Spain.

“This new data centre will help meet growing demand for our AI and cloud services and bring crucial compute capacity to businesses across the UK while creating construction and technical jobs for the local community.

“Together with the UK government, we are working to make AI more helpful and accessible for people and organisations across the country.”

Mr Hunt said of the investment: “From business conducted online to advancements in healthcare, every growing economy relies on data centres.

“Our country is no different and this major $1bn investment from Google is a huge vote of confidence in Britain as the largest tech economy in Europe, bringing with it good jobs and the infrastructure we need to support the industries of the future.”

The announcement was made just a day after Google boss Sundar Pichai told employees in an internal memo to expect more job cuts during 2024.

A year ago, plans for 12,000 global job losses were revealed, amounting to 6% of its workforce.

According to The Verge, which first reported on the communication, the company’s 182,000 staff were told the lay-offs would not be as severe.

The new data centre builds on other recent tech wins for the UK.

Microsoft confirmed plans for a £2.5bn data centre in late November after overcoming UK regulatory hurdles in its £55bn takeover of Activision Blizzard.

Commenting on the latest deal, Ben Barringer, technology analyst at Quilter Cheviot, said there were signs the government’s message that the UK was open for business, particularly in the AI sphere, was getting through.

But he added: “Relations between the government and big tech have been rocky in recent years with the protracted approval of Microsoft’s merger with Activision and Meta downsizing its UK footprint souring relations.

“Looking at the bigger picture for Google, this investment is somewhat a drop in the ocean and simply represents prudent business.

“The cost of this data centre is around a thirtieth of their annual capital expenditure and with approximately 30 data centres already constructed globally, it isn’t exactly going to move the needle for them by adding another.

“Furthermore, it is unlikely that post-construction many jobs will be created. Data centres do not require scores of employees to run them, and given Google is a very lean business, it will be looking to make its operation as efficient as possible.”