The UK economy grew at its fastest quarterly rate since the start of 2024, boosted by technology services and artificial intelligence. The Office for National Statistics (ONS) reported that gross domestic product (GDP) increased by 0.7% in the third quarter, between July and September, up from 0.5% growth in the second quarter.
This marked the strongest growth for a calendar quarter since the first three months of 2024. The figures also showed GDP increasing by 0.2% in September, an unexpected lift after some economists had predicted zero growth for the month.
Services sector drives growth
The ONS said the growth was “almost entirely” fuelled by strength in the UK’s services sector, particularly computer programming, which grew at its fastest rate in three years. It also pointed to evidence that businesses linked to AI adoption were boosting the sector.
GDP for the services industry, which spans sectors from hospitality and leisure to professional and financial services, real estate and healthcare, jumped by 0.9% in the third quarter. Computer programming and consultancy surged by 4.4%, making it the largest driver of GDP growth across 2026.
AI spending boom
The ONS found that many businesses reporting the largest increases in turnover are involved in activities related to AI and cloud computing. This reflects a wider AI spending boom as many businesses prioritise investing in their tech systems over other areas.
Manufacturing activity also helped drive growth for the production sector, particularly in computers and electronic items. In contrast, the construction sector extended its slump, with GDP falling by 0.7% in the third quarter.
Political and economic reactions
Prime Minister Andy Burnham called the figures “welcome news”, adding: “Despite a year where events around the world have pushed up costs here at home, our economy is growing, bringing hope for the future.”
Chancellor John Healey said: “The Middle East conflict has hit growth worldwide, yet Britain is showing standout resilience.” The latest figures show economic growth has accelerated in the face of higher energy prices, which have pushed up inflation and borrowing costs.
However, some economists cautioned that momentum may start to pull back as these cost pressures weigh on activity. Scott Gardner, investment strategist at JP Morgan Personal Investing, said: “While the UK economy has been relatively resilient since the conflict started, that strength will be tested in the months ahead.”
Matt Swannell, chief economic adviser to the Item Club, said the “rapid increase in AI adoption has supercharged growth in the IT services sector”, but he also pointed to other industries coming under pressure, saying: “A combination of cooling pay growth and rising inflation will squeeze consumer spending and intensify pressure on consumer-facing parts of the services sector.”
