UK GDP Q3 2026: Economy Grows 0.7% as AI and Cloud Work Lifts Services

The UK economy grew by 0.7% between July and September 2026, according to the first quarterly estimate from the Office for National Statistics (ONS), published on Thursday 12 November 2026. That is up from 0.5% in the second quarter and leaves gross domestic product (GDP) 1.9% higher than a year earlier.

Almost all of the growth came from services, and within services the biggest push came from information and communication, the part of the economy that includes software, IT consultancy and other work the ONS links to artificial intelligence (AI) and cloud computing. Construction shrank and production barely moved.

This is a first estimate. The ONS says early figures can be revised in either direction, and the next version is due on 22 December 2026.

UK GDP Q3 2026: the key figures

All figures below are from the two ONS releases published on 12 November 2026: the quarterly bulletin and the monthly GDP estimate for September 2026.

Measure	Latest figure
GDP, July to September 2026 (quarter on quarter)	+0.7%
GDP, April to June 2026	+0.5%
GDP, January to March 2026	+0.6%
GDP compared with the same quarter of 2025	+1.9%
GDP per head (quarter on quarter)	+0.7%
Monthly GDP, July 2026	+0.4%
Monthly GDP, August 2026	0.0% (revised down from +0.1%)
Monthly GDP, September 2026	+0.2%
Services output (quarter)	+0.9%
Production output (quarter)	+0.1%
Construction output (quarter)	-0.7%
Household consumption (quarter)	+0.6%
Business investment (quarter)	+0.4%

GDP per head, which adjusts for population growth, rose 0.7% in the quarter and 1.7% over the year.

Reuters, in a report carried by Investing.com, described it as the strongest calendar-quarter expansion since the first quarter of 2024, and said growth in the quarter was the second-fastest in the G7, just behind the United States.

What drove the growth?

Services output rose 0.9%, with 11 of its 14 subsectors contributing positively. Business-facing services grew 1.0%, twice the 0.5% pace of consumer-facing services.

Two areas stood out in the ONS bulletin:

• Administrative and support services rose 4.1%, driven by a 6.6% rise in rental and leasing.
• Information and communication rose 2.1%, with computer programming, consultancy and related activities up 4.4%.

On the spending side, household consumption and government consumption each rose 0.6%. Gross fixed capital formation, the broad measure of investment, rose 1.7%. The ONS said the main drivers were other machinery and equipment, and transport equipment.

How much of the growth came from AI and cloud computing?

This is the part of the release that matters most for the technology sector, and the honest answer is that nobody has an official number yet.

What the ONS does confirm is that information and communication has been the largest driver of GDP growth across 2026, and that many of the fastest-growing businesses in it are linked to AI and cloud computing. The monthly bulletin says the computer programming, consultancy and related activity industry made the largest positive contribution to growth in the three months to September.

The statistics office is careful about how far it goes. It says it is difficult to quantify the exact impact of these activities on turnover, and its monthly release refers only to strength in industries that "may be related" to AI. It plans to publish estimates of the impact of AI on the UK economy in the first quarter of 2028.

Grant Fitzner, the chief economist at the ONS, was quoted by City AM as saying: "We continue to see evidence that AI-linked businesses helped to boost this sector."

There is a hardware story as well. Manufacturing grew 0.9% in the quarter, and output of computer, electronic and optical products rose 4.6%.

One caution sits inside the same data. In September alone, computer programming and consultancy output fell 1.9%, the largest negative contribution to that month's GDP from any industry. A single month proves little, but it shows the sector's growth is not a straight line. For readers new to the technology behind this spending, our explainer on what generative AI is covers the basics.

What held growth back?

Three areas weighed on the quarter, according to the ONS:

1. Construction fell 0.7%. New work dropped 1.6%, led by a 4.7% fall in new private housing, while repair and maintenance rose 0.5%.
2. Parts of production contracted. Mining and quarrying fell 2.2%, energy supply fell 2.1%, and water, sewerage and waste fell 1.5%. Manufacturing was the only part of production that grew.
3. Hospitality and education each fell 0.5%, with food and beverage services down 1.9%.

Business investment was also softer than the headline suggests. It rose 0.4%, which Reuters reported was half of what economists in its poll had expected and the weakest growth since the start of the year.

How does it compare with forecasts?

The quarterly figure matched the expectations of economists polled by Reuters. The surprise was September: output rose 0.2% when no change had been expected.

Official forecasts for the full year have been moving. Reuters reported that the Bank of England now expects GDP to expand 1.6% in 2026, compared with a 1.2% forecast from the Office for Budget Responsibility that accompanied the Budget on 28 October.

What do economists expect next?

The economists quoted in coverage of the release mostly expect a slowdown. These are forecasts and opinions, not confirmed facts.

Felix Feather, an economist at Aberdeen, said in comments published by Trustnet: "But we doubt this pace will last." He pointed to higher energy bills squeezing household incomes over the winter and expects growth to slow meaningfully into 2027.

George Brown, a senior economist at Schroders, said growth had remained resilient despite higher energy prices, and credited business investment linked to the AI build-out.

Reuters reported that household gas and electricity bills are set to rise by about 25% when the energy price cap changes in January. It also reported that investors see a 73% chance of a second consecutive interest rate rise in December. Rob Wood, the chief UK economist at Pantheon Macroeconomics, told Reuters: "Today's figures, at the margin, make a December hike more likely."

That follows the Bank of England's decision on 5 November to raise Bank Rate to 4%.

What this means for the UK tech sector

Our analysis: the release is the clearest official sign so far that software, IT services and computer hardware are doing a large share of the work in UK growth. That is good news for the sector, but it also means the wider economy is more exposed to it.

Two things are worth watching. The first is whether September's fall in computer programming output is a blip or the start of a cooler period. The second is sentiment around AI spending itself, which was shaken a week earlier by the sell-off in AI chip stocks. Sarah Coles, the head of personal finance at AJ Bell, noted in the Trustnet report that there are concerns the AI revolution may not produce sustainable profitability, even as gradual adoption appears to keep delivering improvements.

The next test is the revised third-quarter estimate on 22 December 2026, with the next monthly GDP release due before that, on 11 December 2026.

Sources

• ONS: GDP first quarterly estimate, UK: July to September 2026
• ONS: GDP monthly estimate, UK: September 2026
• Reuters via Investing.com: AI spending helps lift UK growth to fastest since early 2024
• City AM: UK economy grows 0.7 per cent as AI boom lifts business investment
• Trustnet: UK GDP expands 0.7% in Q3 as tech sector leads growth