Britain’s economy has grown at its fastest pace in two years fuelled by growth in the service sector according to new data. Numbers released by the Office for National Statistics (ONS) show economic growth increased to 0.7% in the period of July to September.

It will be seen as welcome news by Andy Burnham and his new Chancellor John Healey, having outpaced growth in the previous two periods. Between January to March the UK economy grew 0.6% and the second quarter of last year it was 0.5%.

Growth in the UK has been slow for nearly two decades since the financial crisis of 2008. Further trouble came in the form of the Covid pandemic and then price spikes caused by Russia’s illegal invasion of Ukraine.

Mr Burnham welcomed the news saying: “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.

“There is more to do, but we have a clear direction.

“Giving people breathing space now while making the long-term changes needed to deliver good growth in every part of Britain.”

Chancellor John Healey said in response to the latest UK growth data: “The Middle East conflict has hit growth worldwide, yet Britain is showing standout resilience.

“Our UK economy is growing at the fastest rate in almost 10 years, outside the pandemic.

“We are backing UK investment, innovation and fast growth firms. I want to bring back confidence in Britain.”

British families have continued to feel the squeeze on prices since the start of the Iran war which has sent energy and fuel prices rising.

Andy Burnham Gets Some Good News as UK Economy Grows at Its Fastest Rate in More Than Two Years

The United Kingdom’s economy has delivered some encouraging news for Prime Minister Andy Burnham, following the publication of official figures showing that economic growth accelerated to its fastest quarterly rate in more than two years. According to the Office for National Statistics (ONS), Britain’s Gross Domestic Product (GDP) increased by 0.7 per cent between July and September 2026, compared with growth of 0.5 per cent in the previous quarter. This represents the strongest quarterly expansion since the first three months of 2024 and provides a positive development for the Government as it attempts to strengthen economic confidence, support businesses and improve living standards across the country.

The latest figures are particularly significant because the British economy has faced several economic challenges throughout the year. Higher energy prices, international conflicts, inflationary pressures and uncertainty in global markets have created difficult conditions for businesses and households. Many families continue to experience financial pressure from rising food prices, electricity bills, mortgage payments and transport costs. Against this background, stronger economic growth offers some encouragement that Britain’s economy may be demonstrating greater resilience than previously expected.

One of the most important factors behind the improvement has been the strength of the services sector, which represents the largest part of the British economy. According to the ONS, services output increased by 0.9 per cent during the third quarter, making it the main contributor to overall economic growth. This sector includes a wide range of activities, such as financial services, hospitality, professional consultancy, healthcare, tourism, entertainment and information technology. Stronger performance across these industries helped offset weakness in other parts of the economy.

Technology-related businesses played a particularly important role in driving growth. Computer programming and consultancy recorded their strongest expansion in approximately three years, supported by increased investment in cloud computing, digital infrastructure and artificial intelligence. Businesses across the country are increasingly adopting AI technologies to improve productivity, automate administrative tasks, analyse information and reduce operating costs. This growing demand for technological services has created new opportunities for British companies and contributed significantly to economic activity.

The increasing importance of artificial intelligence also demonstrates how the structure of the British economy is changing. Companies are investing in digital systems to remain competitive, improve efficiency and respond to changing customer expectations. From financial institutions and manufacturers to retailers and professional service providers, organisations are exploring how AI can improve their operations. The latest economic figures suggest that this investment is already contributing to measurable growth, although the long-term impact will depend on whether businesses can translate technological improvements into sustainable productivity gains and employment opportunities.

Manufacturing activity also provided some support during the third quarter. Production output increased by 0.1 per cent, with the manufacturing of computers and electronic equipment contributing to the improvement. This indicates that certain industrial sectors continue to benefit from demand for technology-related products and equipment. However, the overall performance of the production sector remained relatively modest compared with the services industry.

Not every part of the economy experienced positive growth. The construction industry remained under pressure, with output falling by 0.7 per cent during the three-month period. This decline highlights the continuing difficulties facing construction companies, property developers and businesses involved in infrastructure projects. Higher borrowing costs, expensive building materials and uncertainty about future demand have all contributed to challenging conditions in the sector. The weakness in construction is particularly important because the industry plays a significant role in providing housing, creating employment and supporting investment in national infrastructure.

For Andy Burnham, the latest economic figures provide an opportunity to demonstrate that the Government’s economic priorities are beginning to coincide with improving national performance. The Prime Minister welcomed the figures, describing them as encouraging news for the country. He also emphasised that the Government must remain focused on reducing household bills, creating good-quality jobs, supporting local high streets and helping businesses expand. His message reflects the importance of ensuring that economic growth delivers practical benefits for ordinary people rather than remaining simply a positive statistical achievement.

Chancellor John Healey also welcomed the stronger performance, highlighting Britain’s resilience despite difficult international economic conditions. The Government has argued that investment, innovation and support for fast-growing businesses are essential to creating a stronger and more productive economy. However, the latest figures also raise important questions about how much of the improvement can be attributed to government policy and how much has resulted from private-sector investment, particularly in artificial intelligence and technology.

Economic growth is influenced by many different factors, including consumer spending, business investment, government expenditure, international trade, productivity and global economic developments. Therefore, it would be premature to attribute the entire improvement to any single government decision. The strong performance of technology-related businesses demonstrates that private investment and innovation have played an important role in the latest expansion.

For ordinary households, the most important question is whether stronger economic growth will translate into higher living standards. An increase in GDP does not automatically mean that every family becomes financially better off. Economic growth can occur alongside rising prices, expensive mortgages and pressure on household budgets. Workers may still struggle to afford housing, energy and essential goods even when the overall economy is expanding.

Inflation remains one of the biggest concerns for British consumers. Higher energy costs have placed pressure on businesses and households, while increased borrowing costs have made mortgages and business loans more expensive. If inflation remains elevated, the Bank of England may face difficult decisions regarding interest rates. Higher interest rates can help control inflation, but they can also discourage borrowing, reduce investment and weaken consumer spending. This creates a delicate balancing act for economic policymakers.

There are also concerns that the current strength may not continue at the same pace in the coming months. Economists have warned that higher energy prices, international uncertainty and weaker consumer confidence could affect economic activity during the final quarter of 2026. Businesses facing rising operating costs may become more cautious about recruitment and expansion. Meanwhile, households dealing with expensive mortgages and essential bills may reduce discretionary spending, affecting retailers, restaurants and other consumer-facing industries.

Nevertheless, the latest GDP figures provide an important indication that the British economy has performed better than some earlier expectations. Quarterly growth of 0.7 per cent represents a notable improvement compared with the previous quarter and suggests that several important industries are continuing to expand. The contribution from technology, professional services and digital investment also highlights opportunities for Britain to strengthen its position in emerging industries.

Looking ahead, the Government will need to ensure that economic growth becomes more balanced and benefits all regions of the country. Major cities such as London, Manchester, Birmingham and Leeds have significant opportunities to attract investment, develop technological industries and create skilled employment. However, smaller towns, rural communities and economically disadvantaged regions must also have access to investment, infrastructure and training opportunities. A successful economic strategy should not concentrate growth in only a handful of major urban centres.

The Government must also address the challenge of improving productivity. Britain has experienced persistent productivity difficulties compared with some other advanced economies. Encouraging investment in technology, improving vocational education, developing transport infrastructure and supporting small businesses could help address these problems. Artificial intelligence may offer significant opportunities, but its benefits will depend on whether workers receive appropriate training and businesses can use new technologies effectively.

Ultimately, the latest economic figures represent encouraging news for Andy Burnham and the United Kingdom. GDP growth of 0.7 per cent in the third quarter of 2026 marks the strongest quarterly performance in more than two years, with services, computer programming and AI-related investment providing important contributions. However, the challenges facing the country have not disappeared. Inflation, energy costs, construction weakness and pressure on household finances remain serious concerns. The real test for the Government will be whether it can transform stronger economic growth into better wages, more secure employment, affordable living costs and improved opportunities for communities throughout Britain. Economic expansion is an important first step, but lasting success will ultimately be measured by whether ordinary people feel the benefits in their everyday lives.