UK Economy Grows 0.7% in Q3 2026 as GDP Beats on Annual and Monthly Measures

Britain's economy expanded 0.7% in the third quarter of 2026 on a quarter-on-quarter basis, matching forecasts and accelerating from 0.5% growth in Q2. The annual GDP reading came in at 1.9% year-on-year for Q3, up sharply from 1.4% the prior period and in line with estimates, while the GDP estimate on a year-on-year basis printed at 2.1%, beating the 1.9% forecast and matching the previous reading.

September's monthly GDP figure surprised to the upside, rising 0.2% against a forecast of 0.0% and improving on the prior 0.1% gain. Services output drove much of the monthly gain, rising 0.2% against a flat forecast. Construction output also beat sharply, climbing 0.8% month-on-month versus an estimate of 0.0% and reversing a prior decline of 0.2%.

Industrial and manufacturing production added to the positive tone. Manufacturing output rose 0.7% in September on a monthly basis, well above the minus 0.5% forecast, while the annual rate accelerated to 4.4% from 3.0% and beat the 3.8% estimate. Industrial production grew 0.3% month-on-month against a minus 0.4% forecast, with the annual rate jumping to 3.1% from 1.6%.

Business investment was a softer spot, rising just 0.4% quarter-on-quarter in Q3, a sharp slowdown from 1.8% in Q2, though it matched consensus. On an annual basis, business investment growth slowed to 3.0% from 5.2%. The trade balance also deteriorated, with the total goods trade deficit widening to 22.29 billion pounds in September from 18.01 billion pounds previously, well beyond the 19.20 billion pound forecast, while the non-EU trade deficit expanded to 8.99 billion pounds from 5.29 billion pounds.