UK Economy Expands 0.7% in Third Quarter as AI Provides Extra Engine of Growth

The UK economy grew by 0.7% in the third quarter of 2026, marking its strongest quarterly expansion since early 2024, as artificial intelligence (AI)-related investment and stronger services activity supported economic growth.

According to figures released by the Office for National Statistics (ONS) on November 12, gross domestic product (GDP) increased between July and September, accelerating from 0.5% growth in the previous quarter. The economy expanded by 1.9% compared with the same period in 2025.

AI and Technology Support Economic Activity

The services sector was the biggest contributor to growth, expanding by 0.9% during the quarter. Computer programming, consultancy and other technology-related activities supported business-facing services, while investment in AI infrastructure and cloud computing provided additional momentum.

Computer manufacturing also contributed to industrial activity, highlighting the growing influence of technology investment on the UK economy.

The production sector recorded modest growth of 0.1%, while construction output declined by 0.7%, reflecting uneven performance across industries.

September Growth Shows Continued Momentum

Monthly GDP increased by 0.2% in September, following no growth in August. July recorded growth of 0.4%.

The latest figures indicate that economic activity continued to expand despite higher energy costs and borrowing expenses. However, weaker consumer confidence and declining retail sales have raised questions about the strength of domestic demand.

Economic Outlook Remains Uncertain

The Bank of England has raised its 2026 economic growth forecast to 1.6%, reflecting stronger-than-expected activity and contributions from AI-related spending.

However, economists expect higher energy prices and borrowing costs to create challenges in the coming months. The latest GDP figures are also preliminary and may be revised as more data becomes available.

The third-quarter performance highlights the increasing role of technology investment in supporting Britain's economy, although sustaining growth will depend on broader business activity and consumer demand.

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