AI services help drive UK growth to strongest pace since 2024

The UK economy grew by 0.7% in the third quarter, matching economists’ expectations and recording its fastest quarterly expansion since early 2024. The Office for National Statistics said growth came almost entirely from services, led by IT as businesses expanded their use of AI. September’s growth of 0.2% exceeded forecasts of no expansion.

Information and communication activity increased by 2.1% over the quarter, driven mainly by computer programming, consultancy and related activities. That industry has been the largest contributor to GDP growth across 2026, with AI and cloud computing businesses reporting the biggest turnover increases. Services overall grew by 0.9%, while production made a smaller positive contribution and falling construction activity weighed on the economy. Economists also linked stronger business investment to AI and datacentres, although IT and professional services businesses have been shedding staff.

The expansion came despite higher energy prices and rising inflation. The Bank of England raised interest rates to 4% last week, and analysts said the growth figures could strengthen the case for another increase in December. Others warned that higher borrowing costs and energy bills could undermine household spending and test the economy’s resilience in the coming months.