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AI helps UK economy grow at fastest pace for more than two years

Evidence type
Official statistics
Sources
1 sourceJournalism
Published
2 min read
Truvace record
TRV-2026-2633cite or check it

The UK economy grew by 0.7% in the third quarter, its fastest expansion in two and a half years, as the rollout of AI services increased activity. The Office for National Statistics reported that the economy “grew robustly” in the July to September quarter, almost entirely due to strong and widespread growth in the services sector, led by the IT sector. The quarterly growth rate matched economists’ expectations, and was the fastest recorded since the first three months of 2024, when GDP also rose by 0.7%. In a b…

AI helps UK economy grow at fastest pace for more than two years

The gain

The ONS reported UK GDP grew 0.7% in July to September 2026, the fastest in two and a half years, with the IT sector growing 2.1% and AI and cloud businesses reporting the largest turnover increases.

In brief

The UK economy grew 0.7% in the third quarter of 2026, its fastest expansion since the first three months of 2024, according to the Office for National Statistics. Growth came almost entirely from services, led by the IT sector, as AI services were rolled out.

The information and communication sector grew 2.1% in the quarter, mainly through computer programming and consultancy. The ONS said this industry has driven the most GDP growth across 2026, and AI and cloud firms reported the biggest turnover rises.

Economists differ on how long it lasts. ING's James Smith noted IT and professional services have grown while shedding staff, and the Resolution Foundation's Simon Pittaway said resilience will be tested by rising inflation and interest rates.

Main points

  1. Services output rose 0.9% in the third quarter and production rose 0.1%, while a sharp fall in construction dragged on growth.
  2. The economy grew 0.2% in September, beating forecasts of zero growth, though August growth was revised down from 0.1% to zero.
  3. GDP is up 1.8% so far this year, an annualised pace just above 2.5%, according to Deutsche Bank's Sanjay Raja.
  4. AJ Bell's Sarah Coles said AI-driven gains showed up in less visible back-office work, with administrative and supportive services growing strongly.
  5. ING's James Smith called the IT surge 'very clearly a datacentre story' and said UK data-centre output fell through August and September.
  6. ICAEW's Suren Thiru said businesses ramped up investment amid an AI boom.

The full story

The ONS said the economy grew robustly in July to September, matching economists' expectations. It was the fastest quarterly rate since early 2024, when GDP also rose 0.7%. Chancellor John Healey said the UK was showing standout resilience.

Analysts tied the services strength to AI. Sarah Coles of AJ Bell said AI did a significant portion of the heavy lifting, particularly in administrative and supportive services, while ICAEW's Suren Thiru said AI investment was driving services expansion.

The outlook is mixed. The Bank of England raised rates a quarter point to 4% last week, fuel prices have lifted inflation, and wholesale electricity prices are about double last year's. The OBR forecast 1.2% growth for the year, which now looks out of date.

Sources

1 on file
  1. The Guardiantheguardian.com
    Journalism2026-11-12

Talk it over

Three questions to start on, two more if you have timeThe ONS reported 0.7% growth, led by 2.1% growth in the IT sector, while ING's James Smith noted IT and professional services have grown while shedding staff. How do you weigh the growth against that?

Start with a question

AI helps UK economy grow at fastest pace for more than two yearshttps://truvace.com/item/ai-helps-uk-economy-grow-at-fastest-pace-for-more-than-two-years

  1. The ONS reported 0.7% growth, led by 2.1% growth in the IT sector, while ING's James Smith noted IT and professional services have grown while shedding staff. How do you weigh the growth against that?

    Answer in the thread

  2. Analysts credited AI, but ING's James Smith described the IT surge as a datacentre story and said UK data-centre output fell through August and September. What evidence would settle how much of the growth came from AI?

    Answer in the thread

  3. Growth came almost entirely from services, and AJ Bell's Sarah Coles pointed to back-office work. Who gets the benefit of this growth, and who might not feel it?

    Answer in the thread
If you have more time

  • The Bank of England raised rates a quarter point to 4% and the Resolution Foundation said resilience will be tested. Which later figures would you check to see if the AI-linked growth lasted?

    Answer in the thread

  • August growth was revised down from 0.1% to zero. How might later revisions to these official figures change how you read the 0.7% quarter?

    Answer in the thread

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