The U.K. economy grew at its fastest rate for more than two years in the three months to September, the BBC reported.
Between July and September, the economy expanded by 0.7 percent, accelerating from the previous three months, official figures show. The growth suggests a more resilient economy than expected over the summer, despite the impact of higher energy prices from the Iran war. Strong growth in the services sector — the largest part of the economy, including consultancy, computer programming, hotels and restaurants — helped boost the numbers. Within services, computer programming registered its fastest growth for the past three years, helped by cloud computing and AI-linked spending. The boost from computer programming and consultancy services has been the biggest driver of growth so far this year, the BBC reported.
Grant Fitzner, chief economist at the Office for National Statistics, said it was "possible growth could have been even stronger" if there hadn't been a war in the Middle East. But he said households may still not feel better off, and that prices might soon start to rise more quickly than wages.
Welcome figures, and a warning about January bills
Prime Minister Andy Burnham called the figures "welcome news." "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. Chancellor John Healey told the BBC the figures showed a "remarkable resilience" in the face of global conflicts, and that he hoped they would "bring back confidence in Britain." Asked about how government decisions could be the reason for growth when AI investment has been a main driver, Healey said ministers can always "help or hinder" business confidence and investments.
Sarah Coles, from investment platform AJ Bell, said that since the start of the year, "it's the less visible back-office work that has delivered, with administrative and supportive services seeing strong growth," noting that these are the areas benefitting from the increasing use of AI. The latest figures put the U.K. on course to be the second-fastest growing economy across the major G7 countries, the BBC reported. Jake Finney, a senior economist at consultancy PwC, cautioned that growth was likely to slow over the coming months "unless energy markets stabilise." A sharp rise in energy bills is forecast for January, which is likely to hit consumer spending and confidence, he said.
The official number is a 0.7 percent expansion in the third quarter, the fastest in more than two years, with services and computer programming in the lead. The caveats, from the people quoted in the same report, are that households may not feel richer, that energy bills are forecast to jump in January, and that the pace may slow unless energy markets settle.