The UK economy has grown at its fastest quarterly rate since the start of 2024 following a boost from tech services and AI.
The Office for National Statistics (ONS) said gross domestic product (GDP) increased by 0.7 per cent in the third quarter, between July and September, up from 0.5 per cent growth in the second quarter.
This was the strongest growth for a calendar quarter since the first three months of 2024.
The ONS said it was ‘almost entirely’ fuelled by strength in the UK’s services sector, particularly computer programming, which grew at the fastest rate in three years.
It also pointed to evidence that businesses linked to AI adoption were boosting the sector.
Prime Minister Andy Burnham said the data was ‘welcome news’.
He added: ‘Despite a year where events around the world have pushed up costs here at home, our economy is growing, bringing hope for the future.
‘Our job now is to keep focused on what matters to people: bringing down bills, creating good jobs, helping high streets thrive and backing businesses to grow.
‘There is more to do, but we have a clear direction. Giving people breathing space now while making the long-term changes needed to deliver good growth in every part of Britain.’
Chancellor John Healey added: ‘The Middle East conflict has hit growth worldwide, yet Britain is showing standout resilience.
‘Our UK economy is growing at the fastest rate in almost ten years, outside the pandemic. We are backing UK investment, innovation and fast growth firms. I want to bring back confidence in Britain.’
The latest figures showed 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 per cent in the third quarter.
It was given a lift by computer programming and consultancy surging by 4.4 per cent, making it the largest driver of GDP growth across 2026.
The ONS said it found that many of the 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.
Meanwhile, manufacturing activity helped drive growth for the production sector, particularly of computers and electronic items.
On the other hand, the construction sector extended its slump with GDP falling by 0.7 per cent for the third quarter.
Chancellor John Healey (left) and PM Andy Burnham at 11 Downing Street on October 26
The AI spending boom was a contributor to higher GDP in July, with the ONS revealing that many of the businesses reporting the largest turnover were involved in activities related to AI and cloud computing.
Sanjay Raja, chief UK economist for Deutsche Bank, said there were a few key sectors that were boosting business investment – data centres and IT, defence and aircraft.
‘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.’
But Mr Raja cautioned that growth is set to slow over 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 added.
But he said there had been ‘surprisingly resilient’ survey data into November and added that pre-Budget uncertainty was kept to a minimum this year, which may have kept business activity more stable.
