UK Economy Grows 0.7% in Third Quarter, Boosted by AI Spending

Britain’s economy grew by 0.7% in the third quarter of 2026, according to official data released on Thursday. This growth was supported by increased spending related to artificial intelligence (AI), which helped counterbalance rising energy prices and disruptions from the US-Iran conflict.

The growth rate for gross domestic product (GDP) improved from 0.5% in the previous quarter. This marks the fastest growth since early 2024, as reported by the Office for National Statistics (ONS).

The services sector, especially areas like computer programming, played a significant role in this growth. The ONS noted that many businesses experiencing the highest turnover increases are linked to AI and cloud computing.

In July, the economy grew by 0.4%, but growth stalled in August before picking up again with a 0.2% increase in September. Ruth Gregory, deputy chief economist at Capital Economics, commented that the latest data indicates the economy is entering the fourth quarter with more momentum than previously expected.

Recently, the Bank of England raised its growth forecast for this year and next, attributing this to strong business investments driven by AI demand. This comes as the bank also increased its benchmark interest rate for the first time in over three years due to rising global inflation from high energy costs.

Despite challenges from global conflicts affecting energy supplies, UK finance minister John Healey highlighted the country’s resilience in the face of these pressures. However, the Bank of England anticipates inflation could peak at 4.9% in the second quarter of next year, with a worst-case scenario suggesting it could reach 6.2% if oil prices surge significantly.

As millions of Britons prepare for higher energy bills starting in 2027, the situation remains uncertain. Oil prices have recently dropped to around $90 a barrel amid hopes for diplomatic solutions to the US-Iran conflict.