The United Kingdom’s gross domestic product expanded by 0.7% during the third quarter, marking the strongest quarterly growth rate recorded since early 2024. According to the Office for National Statistics, the expansion was characterized by robust and widespread gains concentrated in the services sector, particularly within information technology and related fields.
The information and communication sector led growth with a 2.1% quarterly increase, fueled by advances in computer programming, consultancy, and artificial intelligence-related activities. Throughout 2026, this sector has maintained its position as the primary driver of economic growth, with businesses specializing in AI and cloud computing reporting the largest gains in revenue. Additionally, administrative and supportive services registered strong performance as organizations increasingly adopted AI technologies for back-office operations.
Chancellor John Healey highlighted the figures as evidence of the UK’s economic resilience, noting that GDP has risen 1.8% year-to-date and is tracking at an annualized pace exceeding 2.5%. Economists noted this represents the strongest first three quarters since the pandemic recovery period. However, growth in the services sector was partially offset by a notable contraction in construction, which has declined more than 7% since mid-2025, with private housebuilding falling 30% from 2022 levels.
The Bank of England voted to increase interest rates by 0.25 percentage points to 4% in response to inflation pressures, primarily driven by elevated motor fuel and wholesale electricity costs. Market participants suggested the strong economic data could support an additional rate increase when policymakers convene in December. While some analysts expressed confidence in sustained momentum, others cautioned that rising energy bills and increased borrowing costs could constrain household spending growth in coming months.
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