Britain's economy grew 0.4% in July, beating economists' forecast of no growth, the Office for National Statistics reported. Services led the expansion, with computer programming the biggest single contributor, while the annual growth rate hit its fastest pace since February 2025.
Britain's economy expanded 0.4% in July, well ahead of the consensus forecast for no growth at all. The reading extends a run of expansion that reached 0.3% in June and zero in May.
Services and AI-linked activity carry the gain
The expansion came from a strong services performance, and computer programming stood out within it. ONS director of economic statistics Liz McKeown said there was evidence that businesses involved with artificial intelligence and related technologies helped boost the sector in May, June and July alike. She also pointed to warm weather and the football World Cup affecting activity in July, though the effects "differed across industries, benefitting some businesses while creating challenges for others."
However, the headline figure does not tell the whole story: growth in July came from rises of 0.4% in services, 0.2% in production and 0.1% in construction.
Annual growth outpaces forecasts
Compared with a year earlier, output in July was 1.6% higher, the fastest annual rate since February 2025 and above economists' 1.2% forecast. Growth in the three months to July held at 0.4%, versus a median forecast for a slowdown to 0.3%.
In the first half of 2026, Britain's economy expanded 1%, the fastest pace across the Group of Seven advanced economies — though some analysts believe this may in part reflect seasonal effects that have not been fully adjusted for. The Bank of England had forecast 1.1% growth for the year, and oil prices have pushed above $105 a barrel this week amid the U.S.-Iran war. The central bank expects inflation to rise to around 3.2% later in the year.
Richard Carter, head of fixed interest research at Quilter Cheviot, cautioned that growth is likely to be hard to sustain, with activity likely to stall ahead of the Budget. He pointed to the Middle East conflict as a continuing drag on UK economic data, adding that calls for pro-growth measures will grow louder as the Budget approaches.
Sources: BBC News, Business | The Guardian, Economic Indicators News
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