The UK economy grew by 0.7% from July to September, the fastest rate in two years, bolstered by strong services output.
It marks the ninth consecutive three-month on three-month growth and follows a growth of 0.6% in the three months to August 2026, official figures show.
According to the Office for National Statistics, the largest contribution to growth came from the services sector, which grew by 0.9% in the three months to September, led by the IT industry. The production sector also grew by 0.1% over the same period, following a fall of 0.5% in the three months to August.
However, these positive figures were partially offset by a 0.7% fall in the construction sector.
On a monthly basis, GDP grew by 0.2% in September, after showing no growth in August and 0.4% growth in July.
Kit Rees, investment strategist at Quilter, said the UK economy has “well and truly confounded forecasts”, with the latest figures in stark contrast to what had been predicted for this year.
Rees said: “The interesting question now is how long that resilience can last. The UK has continued to grow despite a decidedly unhelpful backdrop, but there is a danger the headline number flatters an economy that is beginning to lose momentum underneath.
“While growth remains robust, if unspectacular by historic standards, higher employment costs and rising energy prices are hitting at the same time as cost-of-living pressures weigh down on demand. This is expected to be the case for the rest of this year and into next, unless the geopolitical situation somehow transforms into a more positive backdrop. That is likely to weigh on the economy into next year.”
Rees noted that while energy prices have fallen, the Middle East conflict has had enough of an impact that it continues to hamper future activity. With inflation persistently high and the Bank of England recently raising interest rates, he warned the outlook for the coming months is “not great.”
He added: “The Bank of England is therefore in an unenviable position. The economy continues to show resilience but there are fears it will lose momentum just as energy-driven inflation is keeping pressure on interest rates. A de-escalation in the Middle East would help considerably, but until then the Bank has little room for manoeuvre and thus further rises will be expected.”
Felix Feather, economist at Aberdeen, commented: “UK growth remained remarkably resilient in the third quarter. But we doubt this pace will last. Higher energy bills will increasingly squeeze households’ real incomes over the winter, while tighter monetary policy will also weigh on activity. We therefore expect growth to slow meaningfully into 2027.”
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