UK economy records strongest quarterly growth in more than two years

The UK economy grew by 0.7% in the three months to September 2026, its strongest quarterly performance in more than two years, as growth in the services sector helped offset continued weakness in construction.

The latest figures from the Office for National Statistics (ONS) show that gross domestic product (GDP) accelerated from 0.5% growth in the second quarter of 2026, demonstrating resilience despite higher energy prices and wider global economic uncertainty.

The expansion represents the ninth consecutive period of growth on a rolling three-month basis and the strongest calendar-quarter performance since the first quarter of 2024.

Monthly GDP increased by 0.2% in September, following no growth in August, which was revised down from an initial estimate of 0.1%. July’s growth remained unchanged at 0.4%.

The services sector was the main contributor to economic growth, expanding by 0.9% in the three months to September.

Computer programming was a particularly strong performer, recording its fastest growth in three years, supported by increased demand for cloud computing, artificial intelligence and related technology services.

Growth in computer programming and consultancy services has been a significant driver of the UK economy’s performance during 2026, reflecting continued business investment in digital technology.

Production output increased by 0.1% over the three-month period, recovering from a 0.5% decline in the three months to August.

However, construction remained under pressure, with output falling by 0.7%, following a 0.9% decline in the previous rolling three-month period.

On a monthly basis, all three main sectors recorded growth in September, with services increasing by 0.2%, production by 0.3% and construction by 0.8%.

The stronger-than-expected figures suggest that the UK economy has maintained momentum despite the impact of higher energy costs linked to the conflict in the Middle East and continued uncertainty over inflation and interest rates.

The expansion in technology-related services also highlights the growing importance of digital investment and AI adoption to economic activity.

Grant Fitzner, Chief Economist at the ONS, said it was “possible growth could have been even stronger” if there hadn’t been a war in the Middle East.

However, he also cautioned that stronger economic output may not immediately translate into improvements in household finances, particularly if prices begin rising faster than wages.

Prime Minister Andy Burnham welcomed the latest figures, describing them as encouraging evidence of economic resilience.

“Despite a year where events around the world have pushed up costs here at home, our economy is growing, bringing hope for the future,” he said.

“Our job now is to keep focused on what matters to people: bringing down bills, creating good jobs, helping high streets thrive and backing businesses to grow. There is more to do, but we have a clear direction.”

While the latest GDP figures point to a stronger economic performance than previously anticipated, the outlook remains sensitive to inflation, borrowing costs and global economic developments.