The UK economy grew by 0.7% in the third quarter of 2026, official figures showed on Thursday, 12 November, marking the fastest UK GDP growth since the start of 2024 as demand linked to artificial intelligence (AI) lifted output across the services sector.
The Office for National Statistics (ONS) said real gross domestic product (GDP) rose 0.7% between July and September, up from growth of 0.5% in the second quarter. Compared with the same quarter a year earlier, the economy was 1.9% larger.
FAKTA
- UK GDP grew 0.7% in Q3 2026 (July to September), after 0.5% growth in Q2 2026.
- GDP was 1.9% higher than in Q3 2025, the strongest annual rate since late 2024.
- Services output rose 0.9% and drove the expansion; computer programming grew 4.4%.
- GDP increased 0.2% in September 2026 after no growth in August.
- Construction output fell 0.7% in the quarter, the only major sector to shrink.
- The Bank of England now expects the economy to grow 1.6% in 2026.
Services Lead the Recovery
Growth in the third quarter was almost entirely driven by the services sector, which expanded by 0.9%. Within services, computer programming, consultancy and related activities grew by 4.4%, the fastest rate in three years, making it the largest single driver of GDP growth across 2026 so far.
The ONS said many of the businesses reporting the largest increases in turnover were involved in activities related to artificial intelligence and cloud computing. Information and communication output rose 2.1% in the quarter, and the ONS noted widespread strength in industries that may be related to AI, although it said the exact contribution of AI was difficult to measure.
Household consumption grew by 0.6% in the quarter, supported by spending on transport and housing services. Production output edged up 0.1%, while business investment grew by just 0.4%, the weakest quarterly increase since the start of the year.
The City of London financial district. Services, led by computer programming and AI-related work, powered the UK economy’s 0.7% growth in the third quarter of 2026.
Construction Remains the Weak Spot
Construction was the only major sector to contract, with output falling 0.7% in the third quarter. Within construction, private housing new work dropped by 4.7%, underlining the continued strain on the housing market even as the wider economy picked up.
On a monthly basis, GDP grew by 0.2% in September after showing no growth in August, which was revised down from an earlier estimate of 0.1% growth. July growth was unrevised at 0.4%.
UK GDP Growth in 2026
| Measure | Q2 2026 | Q3 2026 |
|---|---|---|
| Quarterly GDP growth | 0.5% | 0.7% |
| Annual GDP growth | Not stated | 1.9% |
| Services output | Not stated | 0.9% |
| Construction output | Not stated | -0.7% |
| GDP per head | Not stated | 0.7% (1.7% year on year) |
Strongest Quarter Since Early 2024
The 0.7% expansion was the strongest calendar-quarter growth since the first three months of 2024, and the third consecutive quarter of positive growth in 2026. Reuters reported that British growth in the quarter was the second-fastest among the Group of Seven advanced economies, just behind the United States.
The figures also beat expectations. The Bank of England last week raised its annual UK growth forecasts to 1.6% for 2026 and 1.3% for 2027, up from 1.1% for both years in its July forecasts. That is well above the 1.2% forecast for 2026 by the government’s Office for Budget Responsibility after finance minister John Healey’s budget on 28 October, which did not factor in some of the stronger recent GDP data.
Economists nevertheless warned that challenges remain. Rising employment costs, elevated energy prices and continued cost-of-living pressures are still weighing on business confidence and consumer demand, and the Bank of England has warned that inflation could reach 5% in 2027.
Conclusion
The third-quarter figures show a UK economy growing faster than expected, carried by services and by spending on AI and cloud computing. The test in the months ahead will be whether that momentum can broaden beyond technology services into construction, investment and household spending.
