UK economy expands by most in 2-1/2 years in Q3

​Britain's economy grew at the fastest rate in two-and-a-half ​years in the third quarter of 2026, helped ‌by ​a boost from artificial intelligence and extending a strong first-half, official figures showed on Thursday. Gross domestic product expanded by 0.7% in the July-to-September period, in line with a Reuters poll of economists, but ‌faster than its 0.5% growth in the second quarter of the year and the strongest calendar-quarter growth since the first quarter of 2024, the Office for National Statistics said.

On a rolling three-month basis, the growth was the fastest since May. The annual growth rate picked up to ‌1.9% in the third quarter, the strongest reading since the fourth quarter in 2024, and also in line with the 1.9% ‌median forecast in the Reuters poll.

The services sector, which makes up the majority of Britain's economy, grew 0.9% on the quarter and a stronger than expected 0.2% in September alone. "The economy grew robustly in the third quarter almost entirely due to strong and widespread growth in the services sector," ONS chief economist Grant Fitzner said.

"Within ⁠services, ​computer programming again increased strongly, as it ⁠has all year, registering its fastest growth in the last three years. We continue to see evidence that AI linked businesses helped to boost this sector." In ⁠September alone, economic output rose by 0.2%, speeding up from a downwardly revised zero growth between July and August.

Britain's economy has shown surprising resilience in ​the first half of 2026 after expanding by 0.6% in the first quarter. While some economists expect slower growth in ⁠the final quarter of the year as higher energy prices and borrowing costs weigh on activity, the Bank of England last week upgraded its growth projection for 2026 alongside ⁠increasing ​interest rates.

The central bank now expects GDP to expand 1.6% this year, much stronger than the 1.2% forecast by the government's Office for Budget Responsibility after finance minister John Healey's October 28 budget which did not factor in some recent stronger GDP data ⁠and upward revisions to past numbers. The central bank attributed some of the strength to spending on artificial intelligence and a small, ⁠temporary boost from Healey's fiscal plan.

However, ⁠there have been signs of weakening consumer and business demand in the face of prolonged high energy prices and rising interest rates. Official measures showed a fall in retail sales volumes in September and ‌consumer confidence suffered its ‌sharpest month-on-month fall since April 2020 before the budget.