{"id":767078,"date":"2026-09-11T08:52:09","date_gmt":"2026-09-11T08:52:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/767078\/"},"modified":"2026-09-11T08:52:09","modified_gmt":"2026-09-11T08:52:09","slug":"uk-economy-unexpectedly-grows-0-4-in-july-boosted-by-ai-economic-growth-gdp","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/767078\/","title":{"rendered":"UK economy unexpectedly grows 0.4% in July boosted by AI | Economic growth (GDP)"},"content":{"rendered":"

The UK economy grew in July as the rapid expansion of AI appeared to outweigh the economic damage from the Iran war, in a welcome boost for John Healey<\/a>.<\/p>\n

Figures from the Office for National Statistics<\/a> (ONS) showed a surprise 0.4% increase in gross domestic product (GDP), compared with 0.3% growth in June. City economists had forecast zero growth.<\/p>\n

The figures suggested the economy continued to be robust despite the fallout from the Iran war, which has raised energy costs and led to higher interest rates than were expected at the start of the year.<\/p>\n

The ONS said the expansion in July was driven by growth of 0.4% in the services sector, particularly admin services, and computer programming and consulting. Within the latter sector, it said: \u201cMany of the businesses reporting the largest turnover in July 2026 are involved in activities related to artificial intelligence and cloud computing.\u201d<\/p>\n

Martin Beck, the chief economist at WPI Strategy, said: \u201cAt a time when many traditional parts of the economy remain subdued, this is exactly the kind of productivity-enhancing spending the UK needs more of.\u201d<\/p>\n

The economy\u2019s continued strength is good news for John Healey as he prepares for his first budget on 28 October. Photograph: Rasid Necati Aslim\/Anadolu\/Getty Images<\/p>\n

PWC\u2019s chief economist, Barret Kupelian said: \u201cArtificial intelligence continues to have imprints across the UK economy, with AI exposed sectors \u2013 professional services, information technology, administrative services \u2013 recording strong growth.\u201d<\/p>\n

The ONS said industrial production was also up in July, by 0.2%, with a rise in manufacturing output offsetting falls in mining, and electricity and gas supply.<\/p>\n

Over the three months to July \u2013 a period the ONS says is more representative of economic conditions \u2013 GDP growth was also 0.4%, the same pace as in the three months to June.<\/p>\n

Sanjay Raja, the chief UK economist at Deutsche Bank, said: \u201cThe UK growth story is becoming harder to ignore. Households and businesses are still spending \u2013 despite the unfolding energy shock impacting disposable incomes.\u201d<\/p>\n

The economy\u2019s continued strength is good news for Healey, the chancellor, as he prepares for his first budget on 28 October, though experts have warned that the longer-term picture for the economy is less positive.<\/p>\n

Healey said: \u201cBritain\u2019s economy is demonstrating a welcome resilience, despite serious global uncertainty. Our growth although still fragile was the fastest in the G7 in the first half of the year. But, the conflict in the Middle East does have impacts here at home \u2013 from the cost of the weekly family shop to the cost of government borrowing.\u201d<\/p>\n

Economists fear the latest rise in the global oil price \u2013 to well above $100 a barrel \u2013 is likely to stoke higher inflation worldwide, prompting rising borrowing costs.<\/p>\n

Higher interest rates on the UK\u2019s debt are expected to have wiped out at least half of the \u00a324bn headroom Healey\u2019s predecessor had built up against the fiscal rules \u2013 potentially forcing him to increase taxes or cut spending at the budget.<\/p>\n

Since the recent jump in oil prices, markets have raised their expectations for future interest rates and now expect the Bank of England\u2019s policymakers to make four quarter-point rises over the next twelve months.<\/p>\n

Rates are still expected to remain on hold, at 3.75%, when the Bank\u2019s nine-member monetary policy committee meets next week, however, despite the stronger-than-expected growth figures.<\/p>\n

Suren Thiru, the chief economist at the accountancy body the ICAEW, said: \u201cWhile these figures may strengthen the hawkish mood among rate-setters, a September rate rise still looks unlikely as most policymakers remain hopeful that a sluggish economy will ultimately help bring inflation under control, despite escalating US-Iran tensions.\u201d<\/p>\n

As well as strong growth in AI-related sectors, the ONS highlighted the economic impact of the summer heat, and the World Cup, which culminated in mid-July.<\/p>\n

Its director of economic statistics, Liz McKeown, said: \u201csome businesses reported that the warm weather and Fifa World Cup had affected their activity, although effects differed across industries, benefiting some businesses while creating challenges for others.\u201d<\/p>\n

The shadow chancellor, Andrew Griffith said: \u201cNobody in this Labour government should be high-fiving themselves. Our construction and production sectors are shrinking, unemployment is up under Labour, and we\u2019ve got the highest government borrowing rates in almost 30 years.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The UK economy grew in July as the rapid expansion of AI appeared to outweigh the economic damage…\n","protected":false},"author":2,"featured_media":767079,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[84,59,56,54,55],"class_list":["post-767078","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-gb","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/767078","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=767078"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/767078\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/767079"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=767078"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=767078"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=767078"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}