UK economic growth speeds up to 0.7% in third quarter amid AI buildout

The UK economy grew at a faster pace in the third quarter of 2026, matching expectations, while monthly growth in September exceeded forecasts, according to figures released by the Office for National Statistics on Thursday.

Gross domestic product increased by 0.7% in the three months to September, accelerating from 0.5% growth in the second quarter and matching the FXStreet-cited consensus forecast of 0.7%.

On an annual basis, GDP grew by 1.9% in the third quarter, in line with expectations and up from 1.4% in the previous quarter.

Growth was driven by the services sector, which expanded by 0.9%, particularly business-facing services. Production output edged up by 0.1%, while construction output contracted by 0.7%.

GDP per head rose by 0.7% quarter-on-quarter and was 1.7% higher than a year earlier.

Meanwhile, monthly GDP increased by 0.2% in September, beating expectations of no growth, following a flat reading in August, revised down from an initial estimate of 0.1% growth.

George Brown, senior economist at Schroders, said: "Britain's economy is proving surprisingly difficult to knock off course. Growth has remained resilient despite higher energy prices, with business investment doing the heavy lifting amid the artificial intelligence buildout. The labour market recovery also appears to be gathering pace and could increasingly bring households into the recovery too.

"The trouble is that good news on growth is a headache for the Bank of England. If the economy keeps growing robustly as the labour market improves, the energy shock could morph into a more persistent inflation problem. We expect interest rates to peak at 4.5%, but continued strong growth could force the Bank to go further."

Separately, the UK's goods trade deficit widened to £22.29 billion in September from £19.61 billion in August, exceeding the £19.2 billion deficit expected by the FXStreet-cited consensus.

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