AI boom helps drive surprise UK growth in July

Breaking news from the markets: AI boom helps drive surprise UK growth in JulyImage source, Getty ImagesByEmer MoreauBusiness reporterPublished11 September 2026The UK's economy grew faster than expected in July partly helped by businesses using artificial intelligence (AI). The economy expanded by 0. 4%, the Office for National Statistics (ONS) said, whereas analysts had predicted no growth.

Growth in July was helped by a strong performance from the services sector, and particularly computer programming. Experts said the figure showed the UK economy was proving resilient in the face of shocks such as the war in Iran, but they expect growth to slow in the months ahead as high energy prices affect households. July's figure follows growth of 0.

Economic Details

3% in June and zero growth in May. According to the ONS director of economic statistics, Liz McKeown, there was evidence that businesses involved with AI and related technologies helped to boost the sector, not just in July but in May and June as well. The ONS said many of the IT businesses reporting the largest turnover "appear to be involved with AI", though it said it is difficult to quantify the exact impact of AI.

McKeown also said some businesses had said that the warm weather and football world cup had affected activity in July, although she said the effects "differed across industries, benefitting some businesses while creating challenges for others". The ONS said that in the three months to July, which gives a better underlying picture, the economy grew by 0. 4% compared with the previous three months.

Rob Arnold, co-founder of Ascendea, an AI firm which employs nine people, believes the UK hasn't seen the real economic growth potential from the technology yet. He says his company is able to develop apps for other businesses "100 times quicker at a 50th of the cost" because of AI, but that the UK government needs to do more to invest in the sector as there are currently better opportunities in the US. He knows a few small UK-based AI firms that have either moved to the US or are thinking of doing so due to a lack of UK government support.

Analyst Views

Alongside grants and funding, he says the government also needs to invest in training companies on how to use AI as it can be dangerous if not understood properly. "It's like playing with a weapon," he says. Paul Dales, the chief UK economist at Capital Economics, said July's data showed "the resilience of the economy in the first half of the year continued into the second half".

However, he added that higher energy prices and borrowing costs would soon start to hit growth, especially if the rises seen this week are sustained. The Iran war has led to a sharp jump in oil prices, which has fed through to higher energy and fuel prices - affecting households and businesses. This rise in energy costs has led to fears that inflation will remain high, and increase the chance that central banks will hike interest rates to keep price rises under control.

The Bank of England is meeting next week to discuss interest rates.

Economists are analysing what the news means for the markets.