The UK economy is expected to have grown faster in the third quarter, helped by a surge in spending on artificial intelligence and defence, which is offsetting pressure from higher energy prices.
The Office for National Statistics (ONS) is due to release the latest gross domestic product (GDP) figures on Thursday. Economists forecast growth of 0.7% for the period between July and September, up from 0.5% in the second quarter.
Business investment drives growth
Business investment, particularly in technology, infrastructure and defence, has become a key growth engine, according to experts. Data centres were among the sectors boosting investment, the ONS noted, with many of the businesses reporting the largest turnover involved in AI and cloud computing activities.
This spending is helping to counter the impact of higher energy prices on households and businesses since the start of the Iran war.
Resilient consumers and sectors
Sanjay Raja, chief UK economist for Deutsche Bank, pointed to data centres, IT, defence and aircraft as key sectors boosting business investment. “Consumers have also been out in force, despite the energy shock,” he said. “And businesses have remained fairly confident regardless of still-elevated geopolitical uncertainty.”
Growth is also expected in other areas, such as hospitality, which benefited from a summer spending boost, and healthcare activity. These gains could offset weaknesses in manufacturing and construction, which are more exposed to higher energy prices and borrowing costs.
Outlook for the final quarter
Mr Raja cautioned that growth is likely to slow in the final quarter of 2026 as higher inflation and interest rates begin to weigh. “Looking ahead, we expect the UK economic growth story to have cooled a bit,” he said.
However, he noted that survey data into November had been “surprisingly resilient,” and that pre-Budget uncertainty was kept to a minimum this year, which may have helped keep business activity more stable.
