The UK economy grew by 0.7% over the summer, according to official data, with growth driven largely by the service sector and the rapid roll-out of artificial intelligence technology. Chancellor John Healey said the results showed the country was showing "standout resilience" and growing at the fastest rate in almost a decade.
The latest figures for the third quarter, covering July to September, follow stronger-than-forecast growth in the first half of 2026. Growth in September alone was 0.2%.
Service sector leads growth
The Office for National Statistics said the 0.7% growth in the UK's gross domestic product was almost entirely due to the service sector, which makes up the bulk of the economy and includes everything from banks to pubs. Drilling into the data revealed that the UK's IT industry was the main driver, helped by the rapid roll-out of AI technology.
Other sectors doing well included car dealers, accountancy and recruitment agencies, the last of which adding to evidence that the UK's jobs market is holding up better than many economists expected.
Nine-month performance
GDP has now grown by 1.9% over the first nine months of the year, putting the UK on track to be the second-fastest growing economy in the G7 group of countries, just behind the US at 2%.
However, the resilience of the economy will be "severely tested" over the coming months by rising inflation and interest rates, the government was warned.
Political reaction
Prime Minister Andy Burnham said: "Despite a year where events around the world have pushed up costs here at home, our economy is growing, bringing hope for the future. Our job now is to keep focused on what matters to people: bringing down bills, creating good jobs, helping high streets thrive and backing businesses to grow. There is more to do, but we have a clear direction."
Chancellor John Healey said: "The Middle East conflict has hit growth worldwide, yet Britain is showing standout resilience. Our UK economy is growing at the fastest rate in almost 10 years, outside the pandemic. We are backing UK investment, innovation and fast growth firms. I want to bring back confidence in Britain."
Expert warnings
TUC General Secretary Paul Nowak said: "It's great that our economy strengthened further over the summer. This faster growth is a vital foundation for creating jobs and rising living standards. But despite this good news, working people across the country are still up against it today as they face spiralling energy bills as a result of Trump's illegal was in Iran. So the Chancellor was right to tax banks' enormous profits to support families - £100 for most households this January will help cover eye-watering energy costs. After this, more support will still be needed - the next steps should be a social tariff to give low- and middle-income families permanent help with their energy bills."
Simon Pittaway, senior economist at think tank the Resolution Foundation, said: "The UK's strong economic performance has continued into the second half of the year, which is all the more impressive given the ongoing disruption caused by conflict in the Middle East. But with inflation and interest rates both forecast to rise towards 5%, this resilience will be severely tested in the coming months. Stepping back, the good news is that the UK looks to be breaking free of its reputation as a stagnation nation. The less positive news is that stronger economic growth is yet to translate into big living standards gains."
