UK economy grew 0.7% in the third quarter, its fastest this year, led by AI and cloud work

What happened

The UK economy grew 0.7% in the third quarter of 2026 from the second, the Office for National Statistics (ONS) said on 12 November, up from 0.5% in April–June. Compared with a year earlier, output was 1.9% higher. Real GDP per person also rose 0.7%. In September alone the economy grew 0.2%, after flat output in August.

Where the growth came from

• Services, about four-fifths of the economy, grew 0.9%. Information and communication rose 2.1%, led by computer programming and consultancy, up 4.4%. Administrative and support services rose 4.1%, led by rental and leasing.
• Production, which includes manufacturing and energy, edged up 0.1%.
• Construction fell 0.7%, as higher borrowing costs weighed on building.

The ONS said information and communication has been the largest driver of growth across 2026, with many fast-growing firms linked to artificial intelligence and cloud computing, though it noted the exact impact is hard to measure. On the spending side, households spent 0.6% more, the government 0.6% more, and total investment rose 1.7%.

What it means

For the government, faster growth means more tax revenue, which helps the Budget arithmetic (see how government debt grows or shrinks). For the Bank of England, which raised its rate to 4% on 5 November with inflation at 3.5% and expected to rise towards 5% by mid-2027, a strong economy is a reason not to rush to cut: demand that keeps growing can keep prices rising (our story). Our growth mechanic explains how GDP is measured.

First estimates are often revised: on average by about a quarter of a percentage point between the first and the final figure, according to the ONS.

Where it sits in the chain

This is Link 5, the real economy, feeding back into Link 1: strong growth while inflation is high argues for higher rates for longer.

What to watch

• UK inflation and labour market figures for October, due later this month.
• The Bank of England's next decision on 17 December.