UK economy grew by 0.7% in Q3 — the fastest growth in more than two years

Fastest growth in more than two years

The UK economy grew by 0.7% in July–September 2026 compared with the previous quarter — an upward revision from 0.5% in the second quarter. In annual terms, GDP increased by 1.9%, and in September it added 0.2% after flat dynamics in August. The Office for National Statistics (ONS) published these figures on 12 November, Euronews reports. According to economists quoted by the BBC, this is the fastest quarterly figure in more than two years; BBC correspondent Faisal Islam notes that such a figure has not been exceeded outside the pandemic period since 2017.

AI as the main driver

The main source of growth was the services sector, which added 0.9%. Within it, the volume of work in computer programming, consulting and related activities grew by 4.4%, lifting the output of the entire information and communications sector by 2.1%. The ONS called this area 'the largest driver of GDP growth throughout 2026' and noted that many of the companies with the highest turnover growth are linked to artificial intelligence and cloud computing, although their impact is difficult to measure precisely. Demand for AI, according to Sarah Coles of AJ Bell, also supported manufacturing: output of computer, electronic and optical products rose by 4.6% over the three months to September. Meanwhile, construction contracted by 0.7%, and industrial production added only 0.1%.

Context: forecasts, the rate and cautious assessments

The figure significantly exceeded expectations: just a few months ago the forecast for the quarter averaged 0.1%, and the Office for Budget Responsibility assumed only 0.3% in the budget three weeks ago, the BBC writes. Thanks to these figures, the UK could become the second-fastest-growing economy in the G7 after the United States. Last week the Bank of England raised its growth forecast to 1.6% for 2026 and 1.3% for 2027, linking the rise in business investment to AI spending, and increased the key rate by a quarter of a point to 4% — the first time since August 2023. Inflation reached 3.5% in September. Chancellor John Healey stated that 'the conflict in the Middle East has hit growth around the world, yet Britain is showing remarkable resilience.' Analysts, however, remain cautious: Kit Rhodes of Quilter called the growth 'solid, though not impressive by historical standards,' and the BBC points out that in the fourth quarter consumer confidence is already declining amid rising fuel and energy prices, while construction remains in decline.