The United Kingdom recorded a 0.7% increase in economic output during the third quarter, with services accounting for nearly all the expansion. The result matched the consensus among economists surveyed by Reuters, while output stood 1.9% above its level a year earlier.
Figures released by the Office for National Statistics on Thursday showed a marked difference between sectors. Services output increased 0.9% over July–September, compared with a 0.1% gain in production and a 0.7% decline in construction.
Information and communication businesses contributed strongly to the services advance, recording growth of 2.1%. According to the ONS, that industry has contributed more to GDP growth during 2026 than any other. Many companies reporting the strongest turnover increases were operating in areas connected to artificial intelligence and cloud computing.
The monthly figures also brought a stronger September reading than economists had anticipated. Output rose 0.2%, against expectations of no change, although the ONS removed August’s previously reported 0.1% increase, leaving that month flat.
The expansion came amid continuing pressure from energy costs and inflation. Consumer prices rose at an annual rate of 3.5% in September, and the Bank of England has warned that inflation could approach 5% by the middle of 2027.
September also saw oil move above $100 a barrel. Prices stayed beyond that mark until earlier this month before declining in recent days. Natural gas cost roughly three times as much as in February, before the United States and Israel attacked Iran.
The ONS put wholesale electricity prices at approximately twice their year-earlier level. It also reported that motorists continued to face high fuel prices after increases over recent months, attributing those costs to persistent strains in global energy markets.
Chancellor John Healey welcomed the growth figures, describing Britain’s performance as unusually resilient while the U.S.-Iran war weighed on economies worldwide. He said the pace of expansion was the strongest in nearly a decade when excluding the pandemic period, during which lockdowns distorted growth comparisons.
Monetary policy has nevertheless tightened. Last week’s Bank of England decision delivered its first interest-rate increase in three years, accompanied by a warning that further rises could follow unless the war is resolved.
The central bank’s November Monetary Policy Report acknowledged that economic activity had held up better than it had anticipated. Its forecast, however, envisaged weaker growth in the final three months of the year and into 2027.
Attention now turns to December, when the Bank holds its last policy meeting of the year. LSEG data show market pricing assigns a 73% probability to another interest-rate increase.
