Amazon’s cloud computing arm will invest £8bn in the UK to build datacentres that support customers in London and the west of England, Rachel Reeves said on Wednesday.

The chancellor said the investment, which it was estimated would create as many as 14,000 jobs at Amazon and in local businesses, was part of the government’s “long-term mission to boost growth, unlock investment and make every part of Britain better off”.

Reeves said the investment by Amazon Web Services (AWS) would generate employment in the company’s datacentres and in the construction, facility maintenance, engineering and telecommunications industries.

The news may, however, be overshadowed by the expected imminent announcement of the loss of 2,500 jobs at the Port Talbot steelworks in south Wales despite a £500m taxpayer-backed rescue deal.

AWS said it expected the investment would contribute £14bn to the UK’s national income, or gross domestic product (GDP), from 2024 to 2028.

Reeves said: “I am under no illusion to the scale of the challenge facing our economy. Two quarters of positive economic growth does not make up for 14 years of stagnation under the previous government.

“However, this £8bn investment marks the start of the economic revival and shows Britain is a place to do business.”

The announcement was greeted with scepticism by the GMB union, which narrowly lost a battle with Amazon over union recognition at its Coventry warehouse in July. Keir Starmer had praised the campaign, calling it “fantastic”.

The GMB general secretary, Gary Smith, said: “New jobs and investment are always welcome, but serious questions have to be asked over whether Amazon Web Services is a good company to celebrate.

“It receives hundreds of millions in taxpayer cash, while often paying limited amounts in tax. Meanwhile, workers in Amazon’s warehouses are treated appallingly and denied a voice”

AWS is under investigation by the UK’s competition watchdog, the Competitions and Markets Authority (CMA), after an initial examination of the market for cloud computing services by the telecoms regulator, Ofcom, said it was concerned that the US firm could be using its market power to limit competition.

Ofcom said last year that it was “particularly concerned about the position of the market leaders Amazon and Microsoft”.

Cloud computing, or the delivery of IT services such as data storage and computing power over the internet with a pay-as-you-go pricing structure, is widely used by businesses and has emerged as a significant piece of infrastructure in the development of the next generation of artificial intelligence (AI) models.

AWS and Microsoft were accused by users of preventing them from switching or mixing and matching with rival cloud providers.

AWS said in response to the CMA investigation that “the market for IT services is well-functioning, innovative, dynamic, highly competitive, and produces considerable benefits for customers”.

Amazon’s better-known online retail business has faced criticism from trade unions over working conditions and alleged “union-busting” tactics, which the company denies.

The government has promised to make it easier for unions to organise in workplaces as part of its new deal for working people.

AWS said it would not release the location of the new datacentres “for security reasons”. The government said it was “actively engaged in conversations” with the company about investments in other parts of the UK.