AI spending helps lift U.K. growth to fastest rate since early 2024

Detailed summary

Britain’s economy has shown surprising resilience in the first half of 2026

Britain’s economy grew at the fastest rate in two-and-a-half years in the third quarter of 2026, helped by investment in artificial intelligence, extending a strong first half and defying predictions of a slowdown made after the Iran war began.

Gross domestic product grew 0.7 per cent in the July-to-September period, up from growth of 0.5 per cent in the second quarter and the strongest calendar-quarter expansion since the first quarter of 2024, the Office for National Statistics said on Thursday.

The annual growth rate picked up to 1.9 per cent in the third quarter, the strongest reading since the fourth quarter of 2024, while on a rolling three-month basis, growth was the fastest since May.

While the quarterly growth rates were in line with economists’ expectations in a Reuters poll, in September alone output climbed 0.2 per cent, bucking expectations for unchanged output on the month.

“Something is stirring: monthly GDP beat consensus for the fifth straight month and the seventh in eight,” said Rob Wood, chief U.K. economist at Pantheon Macroeconomics, adding that the data strengthened the chances of another Bank of England rate hike next month.

British growth in the third quarter was the second-fastest in the Group of Seven advanced economies, just behind the United States. So far this year, growth has been the strongest since 2017, excluding the post-pandemic rebound.

The ONS said there was “widespread strength in industries which may be related to artificial intelligence.”

Computer programming, consultancy and related activity made the largest single contribution to growth in the third quarter, while computer manufacturing made the biggest contribution to industrial production, up 4.6 per cent in the three months to September.

Britain’s economy has shown surprising resilience in the first half of 2026 after expanding by 0.6 per cent in the first quarter.

Opening of the article, excerpted from The Globe and Mail (Report on Business). To read the rest, open the article on the publisher's site.