UK Economy Grows 0.7% in Q3 as AI Spending Defies Slowdown Fears
Updated
Updated · The Guardian · Nov 12
UK Economy Grows 0.7% in Q3 as AI Spending Defies Slowdown Fears
3 articles · Updated · The Guardian · Nov 12
Summary
Britain’s 0.7% third-quarter expansion beat even the most optimistic City forecast of 0.3%, marking the fastest growth in 2.5 years and putting the UK on track to be the G7’s second-fastest grower this year.
AI-led business investment and household spending powered the surprise: IT and professional services generated about half the rise in activity, while Deutsche Bank estimates AI spending added 0.3% to 0.4% to GDP growth this year.
Household consumption has risen 1.6% so far in 2026, helped by summer spending despite higher fuel costs from the Iran war, but September retail sales and discretionary spending already showed early weakness.
January energy bills are expected to jump about 25%, pushing average annual gas and electricity costs above £2,000, while inflation is seen nearing 5% next year and real wage growth is cooling.
That resilience may also keep the Bank of England tightening, with investors pricing at least two more quarter-point rate hikes to 4.5% by end-2027, adding pressure to growth as the AI boom looks less certain.