UK economic growth is forecast to have picked up pace in the third quarter as businesses ramped up spending on artificial intelligence and defence, helping to cushion the impact of higher energy prices on households and the broader economy. The Office for National Statistics is due to release gross domestic product figures on Thursday, with economists predicting growth of 0.7% for the three months to the end of September, compared with 0.5% in the previous quarter.
Business investment has emerged as a key driver of the acceleration, with companies channelling funds into technology, infrastructure and defence spending. The ONS previously highlighted that AI and cloud computing activities were among the largest contributors to growth in July, as firms in these sectors reported substantial turnover. Sanjay Raja, chief UK economist for Deutsche Bank, identified data centres and IT, defence and aircraft as the sectors leading the investment surge. He noted that consumers have also maintained their spending momentum despite energy price shocks, and businesses have held relatively steady confidence levels despite ongoing geopolitical uncertainty.
Growth in hospitality and healthcare is also expected to provide support to the overall figures. These sectors have benefited from increased activity over recent months, potentially offsetting weakness in areas more vulnerable to energy cost increases and higher borrowing rates, such as manufacturing and construction.
However, experts warn momentum may fade before long. Raja cautioned that growth is expected to slow during the final quarter of 2026 as elevated inflation and interest rates begin to bite harder. He added that survey data into November has shown surprising resilience, and noted that minimal pre-Budget uncertainty this year may have helped keep business activity more stable than might otherwise have been the case.
For UK savers and borrowers, this near-term growth outlook is being tempered by forecasts of slower expansion ahead, though resilient business investment and consumer spending offer some near-term support.