Economists cited by The Independent expect Britain’s economy to grow 0.7% in the third quarter, with technology and defense investment supporting activity amid higher energy costs.
The July-September forecast would exceed the 0.5% growth reported for April through June. The Independent described spending on technology, infrastructure and defense as an increasingly important support for output while living costs press on consumers.
Sanjay Raja, Deutsche Bank’s chief UK economist, told The Independent that investment in data centers, IT, defense and aircraft was helping business spending. He said consumers continued to spend despite the energy shock and that companies remained “fairly confident” despite geopolitical uncertainty.
Energy prices rose after the Iran war began, adding pressure for households and businesses, the report said. Economists cited by the newspaper expect hospitality and health care activity to expand; hospitality benefited from summer spending. Manufacturing and construction face more exposure to energy and borrowing costs, which could weigh on those sectors.
The Independent also connected AI-related spending with July’s GDP increase, citing Office for National Statistics (ONS) data showing that many businesses with the highest reported turnover were involved in AI or cloud computing. That link is the newspaper’s interpretation of the turnover figures; the cited data does not give an estimate of AI’s contribution to GDP. Bank of England Governor Andrew Bailey has also said AI investment supported activity in business services, without quantifying its effect, as Bailey’s earlier comments on AI and UK activity noted.
Raja expects growth to cool in October-December as inflation and interest rates constrain activity. He said survey indicators had stayed firm into November and suggested that less uncertainty before the Budget may have helped businesses maintain activity. The ONS is due to publish its third-quarter GDP figures Thursday, Nov. 12.
