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UK GDP growth accelerates to 0.7 per cent on investment
Developing story first seen 31 minutes ago
The latest figures show UK GDP grew by 0.7 per cent in the third quarter, accelerating from 0.5 per cent in the previous quarter. The increase was supported by business investment in AI, data centres, infrastructure and defence, helping offset higher energy costs linked to the Middle East conflict.
Consumers continued spending and businesses remained fairly confident despite geopolitical uncertainty, according to Deutsche Bank economist Sanjay Raja. He expects growth to cool in the final quarter as inflation and interest rates weigh on activity, although survey data into November was resilient and pre-Budget uncertainty was limited.
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In short
- UK GDP grew 0.7 per cent in the third quarter.
- AI, data centre and defence investment supported growth.
- Higher inflation and interest rates may slow growth later in the year.
How this story developed
- 26 minutes ago The updated account repeats the 0.7 per cent growth figure and adds that November survey data remained resilient, while Deutsche Bank economist Sanjay Raja warned that inflation and interest rates could slow activity in the final quarter.
- 31 minutes ago UK GDP expanded by 0.7 per cent in the third quarter, with investment in AI, data centres, infrastructure and defence helping to counter higher energy costs tied to the Middle East conflict.
Full account
UK gross domestic product grew by 0.7 per cent between July and September 2026, up from 0.5 per cent in the previous quarter, according to figures from the Office for National Statistics. The result exceeded recent expectations and marked the strongest quarterly expansion in more than two years. September alone saw growth of 0.2 per cent, where forecasters had anticipated no change.
Services led the increase, expanding by 0.9 per cent over the quarter. ONS chief economist Grant Fitzner said growth was broad across the sector, with computer programming particularly strong and at its fastest pace in three years. Production rose by 0.1 per cent, while construction contracted by 0.7 per cent. Household spending also increased compared with the previous quarter.
Business investment rose by 0.4 per cent during the quarter and was around 3 per cent above its level a year earlier. The reports point to technology, data centres, defence and aircraft as areas supporting investment, with AI-related activity contributing to the strength in computing services. One cited estimate attributed about a fifth of growth to AI investment. Consumer spending also held up despite higher energy costs linked to the Iran war.
Prime Minister Andy Burnham called the figures welcome, while Chancellor John Healey described the economy as resilient and said growth was at its fastest in almost a decade outside the pandemic. Economists cautioned that the pace may ease later in the year as inflation and interest rates weigh on activity, although some recent business surveys have remained firmer than expected.
Where outlets differ
From the full account, which is AI-written from the sources:
The first report foregrounds business investment in AI, defence and infrastructure as a counterweight to higher energy costs, and includes Deutsche Bank economist Sanjay Raja’s outlook for slower growth in the final quarter. The second gives more detail on sector breakdowns, September’s monthly growth and the year-on-year GDP comparison; it also cites estimates that AI investment accounted for roughly a fifth of expansion. Both reports stress the resilience of spending and the contribution of AI-linked activity, but present different supporting details and forecasts.
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Originally published by Daily Mail as “UK economy grows by 0.7 per cent as spending on AI and defence staves off cost-of-living slowdown”.