LONDON: Britain's economy grew at the fastest rate in two-and-a-half years in the third quarter of 2026, helped by a boost from artificial intelligence and extending a strong first-half, official figures showed on Thursday.
Gross domestic product expanded by 0.7% in the July-to-September period, in line with a Reuters poll of economists, but faster than its 0.5% growth in the second quarter of the year and the strongest calendar-quarter growth since the first quarter of 2024, the Office for National Statistics said.
On a rolling three-month basis, the growth was the fastest since May.
The annual growth rate picked up to 1.9% in the third quarter, the strongest reading since the fourth quarter in 2024, and also in line with the 1.9% median forecast in the Reuters poll.
The services sector, which makes up the majority of Britain's economy, grew 0.9% on the quarter and a stronger than expected 0.2% in September alone.
"The economy grew robustly in the third quarter almost entirely due to strong and widespread growth in the services sector," ONS chief economist Grant Fitzner said.
"Within services, computer programming again increased strongly, as it has all year, registering its fastest growth in the last three years. We continue to see evidence that AI linked businesses helped to boost this sector."
In September alone, economic output rose by 0.2%, speeding up from a downwardly revised zero growth between July and August.
Britain's economy has shown surprising resilience in the first half of 2026 after expanding by 0.6% in the first quarter.
While some economists expect slower growth in the final quarter of the year as higher energy prices and borrowing costs weigh on activity, the Bank of England last week upgraded its growth projection for 2026 alongside increasing interest rates.
The central bank now expects GDP to expand 1.6% this year, much stronger than the 1.2% forecast by the government's Office for Budget Responsibility after finance minister John Healey's October 28 budget which did not factor in some recent stronger GDP data and upward revisions to past numbers.
The central bank attributed some of the strength to spending on artificial intelligence and a small, temporary boost from Healey's fiscal plan.
However, there have been signs of weakening consumer and business demand in the face of prolonged high energy prices and rising interest rates.
Official measures showed a fall in retail sales volumes in September and consumer confidence suffered its sharpest month-on-month fall since April 2020 before the budget. - Reuters
