What changed
The UK economy grew 0.7% in the three months to September, its fastest pace in more than two years. That beat the 0.1% average forecast and the Office for Budget Responsibility’s 0.3% Budget projection.
AI and technology spending helped drive the gain. Consumers also held up through the autumn, while productivity, private-sector investment and sterling strengthened.
Why it matters
The number interrupts Britain’s long run of weak third-quarter growth. Across the four post-pandemic Q3 periods, growth averaged below 0.1%. If this pace were maintained, the UK would be on course to become the second-fastest-growing major G7 economy, behind the US.
That does not make this a boom. Construction and private housebuilding remain depressed, and the forces supporting households are becoming less friendly. Consumer confidence has fallen as petrol and domestic energy prices rise, adding fresh pressure to everyday spending.
The more encouraging detail is investment. Spending on AI and technology is lifting activity across the economy, while private-sector investment and productivity look stronger after recent revisions. That offers a more useful signal than the headline alone: businesses are still committing money to capacity and technology, even with borrowing costs high.
The outlook is fragile. Growth may weaken in the final three months of the year if households pull back. The Iran conflict and Gulf energy supply are further unknowns. If oil and gas production there continue to normalise, petrol prices, energy bills, government borrowing costs and mortgage costs could all ease. If not, the current burst of strength may prove difficult to extend.
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