UK economy grows 0.7% in the third quarter, its strongest expansion since early 2024, on AI investment
Official figures show the fastest growth in more than two years, adding to expectations that the Bank of England will raise rates again.
The UK economy grew by 0.7% in the three months to September, according to official figures5,7. It was the strongest quarterly expansion since the first quarter of 2024 and the fastest growth in more than two years4,5.
Spending on artificial intelligence helped lift output1,4. The Office for National Statistics said the tech industry has been the largest driver of GDP growth, with AI and cloud work lifting services8,9. AI has provided an “extra engine of growth”, according to one assessment of the figures2.
The figure came from the first quarterly estimate for July to September 20269. Monthly GDP figures were published alongside it8. Coverage of the release linked the strength of the economy directly to investment in artificial intelligence4,5,6.
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Why it matters to investors
The data strengthen the case for higher interest rates. The economy’s resilience could raise the chances of further Bank of England rate rises as policymakers try to contain inflationary pressures3. One economist said the strong growth “supports multiple rate hikes”6.
Forecasters expect another move soon. Selfin, an economist cited in coverage of the release, expects the Bank of England to raise rates again, probably in December, to curb inflation4. One assessment said GDP growth had so far been “more resilient than expected”2. The figures show that resilience persisting even as the central bank works to contain inflationary pressures3,5.
The Bank of England now expects GDP to expand 1.6% this year, much stronger than the 1.2% it had forecast earlier1.
What to watch
The Bank of England’s December decision is the next event for gilt and sterling markets, with economists pointing to that meeting for a possible further increase3,4. The strength of the data makes the case for tightening harder to dismiss6.
The second question is how durable the AI-led growth proves to be. The technology industry has been the largest driver of growth, which leaves the expansion tied to continued investment in AI and cloud services1,8,9. Later estimates of the same quarter will show whether the 0.7% figure holds7,9. Investors will also look at whether the Bank of England changes its growth forecast again after raising it to 1.6% for this year1.
Sources
- AI spending helps lift UK growth to fastest since early 2024 - Reuters, reuters.com (2026-11-12)
- UK economy expands 0.7% in third quarter as AI provides ‘extra engine of growth’ - CNBC, cnbc.com (2026-11-12)
- UK economy expanded by 0.7% in third quarter - Financial Times, ft.com (2026-11-12)
- UK economy grows at fastest rate in more than two years, boosted by AI investment - BBC, bbc.com (2026-11-12)
- U.K. Economy’s Resilience Continues, Boosted by AI Investment, wsj.com (2026-11-12)
- AI Helps UK Economy Post Strongest Growth Since Early 2024, bloomberg.com (2026-11-12)
- UK economy grows at fastest rate for more than two years, bbc.co.uk (2026-11-12)
- UK GDP expands 0.7% in Q3 as tech sector leads growth - Trustnet, trustnet.com (2026-11-12)
- UK economic growth picks up to 0.7% in the third quarter as AI and cloud work lift services, mlq.ai (2026-11-12)
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