UK economy grows 0.7% as AI-linked investment boosts services

The UK economy grew by 0.7% in the three months to September, its fastest quarterly expansion for more than two years, with computer programming and consultancy among the main drivers, official figures show.

The growth was stronger than expected after a summer marked by higher energy prices linked to conflict in the Middle East. Services, the largest part of the economy, helped lift the overall figure; computer programming recorded its fastest growth in three years, supported by cloud computing and spending linked to artificial intelligence.

Grant Fitzner, chief economist at the Office for National Statistics, said growth might have been stronger without the war. He also warned that households might not feel better off, with prices potentially rising faster than wages.

The figures brought a welcome response from Prime Minister Andy Burnham. Chancellor John Healey told the BBC the economy had shown “remarkable resilience” amid global conflicts, and said he hoped the results would help restore confidence in Britain.

AI-related investment is contributing to growth even as investors have raised concerns about the pace of AI development and the long-term viability of some firms’ business models. AJ Bell analyst Sarah Coles said growth since the start of the year had come particularly from administrative and support services benefiting from wider AI use.

The UK is now on course to be the second-fastest-growing economy among the G7 major economies, according to the BBC. But PwC senior economist Jake Finney cautioned that growth could slow in the coming months unless energy markets stabilise. A forecast rise in energy bills in January could weigh on household spending and confidence.