GDP up 0.7%: Britain defies hit from Trump’s Iran war to grow economy, says Andy Burnham

The UK’s economy grew by 0.7% in the three months to September, according to official figures.

The sharp rise in GDP was the fastest quarterly rate since the start of 2024 following a boost from tech services and AI.

It comes after growth of 0.5% between April and June.

Britain’s economy has grown

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Real GDP per head is estimated to have increased by 0.7% in the third quarter of 2026 and is up by 1.7% compared with the same quarter a year ago, the Office for National Statistics said.

The GDP rise was “almost entirely” fuelled by strength in the UK’s services sector, particularly computer programming, which grew at the fastest rate in three years.

The ONS also pointed to evidence that businesses linked to AI adoption were boosting the sector.

Welcoming the economic figures, Andy Burnham said: “Despite a year where events around the world have pushed up costs here at home, our economy is growing, bringing hope for the future.

"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.”

Andy Burnham welcomed the strong economic growth despite higher inflation fuelled by Donald Trump’s Iran war

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However, business chiefs in London warned against any complacency.

Muniya Barua, BusinessLDN’s Deputy Chief Executive, stressed: “The economy has proven resilient in the face of significant headwinds as the war in Iran pushes up inflation and the cost of borrowing.

“But the Government can't take this for granted and should act now to prevent growth stalling in the coming months as energy prices jump for households and businesses.”

She added: “Ministers must keep up the momentum with fiscal devolution so that the capital and other regions can fund vital infrastructure, including the Bakerloo line extension and West London Orbital, which can unlock tens of thousands of new homes and jobs.

“At the same time, projects such as Heathrow expansion must progress at pace to unlock the benefits improved connectivity can deliver to London and the UK.”

Heathrow third runway plan

Heathrow

ONS Chief Economist Grant Fitzner said: “The economy grew robustly in the third quarter almost entirely due to strong and widespread growth in the services sector.

“Within services, computer programming again increased strongly, as it has all year, registering its fastest growth in the last three years. We continue to see evidence that AI linked businesses helped to boost this sector.

“Leasing of cars, intellectual property and property management companies also helped to boost services, alongside increases in accountancy, employment agencies and car dealerships.

“Meanwhile, production grew slightly, with a notable increase in computer manufacturing, while construction fell back a little.

“Over the last year the economy registered its highest growth in almost two years, driven by increases in consumer spending and investment.”

Sanjay Raja, chief UK economist for Deutsche Bank, said there were a few key sectors that were boosting business investment – data centres and IT, defence and aircraft.

“Consumers have also been out in force, despite the energy shock,” he added.

“And businesses have remained fairly confident regardless of still-elevated geopolitical uncertainty.”

But Mr Raja cautioned that growth is set to slow over the final quarter of 2026 as higher inflation and interest rates begin to weigh.

“Looking ahead, we expect the UK economic growth story to have cooled a bit,” he said.

But he stressed that there had been “surprisingly resilient” survey data into November and added that pre-Budget uncertainty was kept to a minimum this year, which may have kept business activity more stable.