The UK economy grew 0.7% in the third quarter of 2026, driven by the services sector and AI-related activity, according to official data from the Office for National Statistics.
By Hermes Vector
The UK economy grew by 0.7% in the third quarter of 2026, official data from the Office for National Statistics has confirmed. The growth was in line with estimates from economists polled by Reuters.
The services sector expanded by 0.9%, offsetting 0.1% output growth in the production sector and a 0.7% contraction in construction. Within services, information and communication was a key driver, expanding by 2.1% in the quarter.
The ONS said: "This industry has been the largest driver of GDP growth across 2026, with evidence that many of the businesses reporting the largest increases in turnover are involved in activities related to artificial intelligence and cloud computing."
The ONS added: "However, because of the nature of our data collection, it is difficult for us to quantify the exact impact of these types of activities on turnover."
In September, the economy grew by 0.2% month-on-month, beating expectations that GDP would flatline. Revised figures showed zero growth in August.
Chancellor John Healey said the country was showing "stand-out resilience" despite the U.S.-Iran war hitting growth worldwide. He said: "Our U.K. economy is growing at the fastest rate in almost ten years, outside the pandemic."
Prime Minister Andy Burnham said the third-quarter growth was "bringing hope for the future."
Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, said it had been "a strikingly strong third quarter" for the U.K. He said: "AI fired up as an extra engine of growth in the quarter, with businesses ramping up investment, including in infrastructure, tech hardware and computer programming, to strengthen their resilience against growing headwinds, while also boosting economic activity."
Thiru added that the figures help keep a December interest rate rise firmly on the table. The Bank of England raised interest rates for the first time in three years the previous week, warning that without a resolution to the U.S.-Iran war there could be more hikes ahead. The U.K.'s annual inflation rate jumped to 3.5% in September, and the Bank of England warned it could rise to around 5% by mid-2027.
Markets are currently pricing in a 73% chance of a rate hike from the Bank of England at its final meeting of the year in December, according to LSEG data.
The data shows the UK economy expanded for a third consecutive quarter, with AI-related activity in the information and communication sector contributing to growth. However, analysts warn that rising inflation, interest rates, and uncertainty from the Middle East war could test the economy's resilience in the coming months.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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