UK GDP expands 0.7% in Q3 2026, driven by services sector

The United Kingdom's gross domestic product rose 0.7% in the third quarter of 2026, in line with Reuters poll expectations, according to data from the Office for National Statistics (ONS). Year-on-year growth for the three months to September was 1.9%.

The services sector posted a 0.9% increase, offsetting a 0.1% rise in production and a 0.7% decline in construction. Within services, information and communication expanded by 2.1%, which the ONS linked to activity in artificial intelligence and cloud computing, though it noted the exact impact on turnover could not be quantified.

In September, monthly growth was 0.2%, surpassing forecasts of flat performance and improving on August’s revised zero growth.

U.K. finance minister John Healey said the economy was showing “stand-out resilience” despite the ongoing U.S.–Iran conflict, and Prime Minister Andy Burnham described the third-quarter growth as “bringing hope for the future.”

Investment strategist Scott Gardner of J.P. Morgan Personal Investing called the results “a decent set of results” and highlighted that the economy’s resilience would be tested by upcoming budget discussions and geopolitical uncertainty.

Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, said AI acted as “an extra engine of growth” as businesses increased investment in infrastructure, technology hardware and programming.

The Bank of England, which recently raised interest rates for the first time in three years, noted that inflation rose to 3.5% in September and could approach 5% by mid-2027. Markets price a 73% probability of another rate hike at the December meeting, according to LSEG data.