UK economy grows 0.4% in July as AI lifts services

The UK economy grew by 0.4% in July after expanding by 0.3% in June, the Office for National Statistics said on Friday, with computer programming and AI-related businesses helping to lift the services sector.

GDP output in the three months to the end of July also grew by 0.4%, the ONS said.

Liz McKeown, the ONS director of economic statistics, said continued strength in services was only partly offset by falls in production and construction over the three-month period. She said computer programming was the largest contributor within services, with evidence that businesses involved in artificial intelligence and related technologies helped boost the sector.

The ONS said July output was also helped by the football World Cup and hot weather, which lifted trade for some businesses. It said the value of UK imports and exports rose in July.

Finance minister John Healey said Britain's economy was showing “welcome resilience” despite global uncertainty. He said the conflict in the Middle East was affecting costs in Britain, including food prices and government borrowing costs.

Paul Dales, chief UK economist at Capital Economics, said support from AI-related activity could be offset by higher energy and borrowing costs if recent increases are sustained.

The figures come before the Labour government's budget update on October 28. Healey has pledged to maintain strict fiscal discipline, but did not say whether the budget would include tax rises.