The UK economy expanded 0.4% month-on-month in July 2026, beating economist forecasts of zero growth, according to Office for National Statistics figures released on 11 September 2026. The reading accelerated from the 0.3% growth recorded in June and extended a run of eight consecutive three-month increases in UK GDP. On an annual basis, July output stood 1.6% above July 2025, while GDP in the three months to July 2026 was 1.3% above the same period a year earlier.

Services were the primary engine of growth. Computer programming, consultancy and related activities grew 3.5% in July, contributing 0.12 percentage points to real GDP growth. The ONS said many businesses reporting the largest turnover increases in the sector are involved in artificial intelligence and cloud computing, while cautioning that its surveys cannot quantify the AI contribution precisely [Source: ONS]. Liz McKeown, ONS director of economic statistics, told the BBC that AI-related businesses had supported services in May, June and July. On the three-month measure, services rose 0.6%, while production and construction each fell 0.5%. Consumer-facing services fell 0.4% in July, led by a 0.5% drop in retail trade. The Bloomberg summary attributes the July expansion to activity holding up across the board despite a sharp rise in household energy bills.

Financial markets registered a measured response to the release. GBP/USD traded near 1.3515-1.3518 following the data, with sterling up 0.12% against both the US dollar and the euro by 8 a.m. in London. The FTSE 100 was marginally above the flatline in early trade. Yields on UK government bonds fell across the curve, bucking a global trend that saw government borrowing costs rise. George Vessey, lead FX and macro strategist at Convera, said the UK may have delivered the strongest growth performance in the G7 through the first half of 2026 but that markets remain preoccupied with the ongoing sell-off in global bond markets [Source: CNBC].

The data arrive against a backdrop of pressure on UK borrowing costs. Earlier in the week, the yield on 30-year gilts hit a record 5.82% at Tuesday's government debt sale, the highest level since the Debt Management Office was established in 1998. Since mid-2024, the Bank of England has lowered interest rates from 5.25% to 4.00%, and by the middle of 2026 investors are fully discounting only one additional BoE rate cut.

Analysts cautioned that the headline figure masks underlying pressures. Yael Selfin, chief economist at KPMG, said the headline masks a weaker picture for households, with higher energy and fuel prices and elevated mortgage rates still weighing on spending [Source: Streamlinefeed]. Paul Dales, chief UK economist at Capital Economics, read July as evidence that first-half resilience carried into the second half, but warned that sustained increases in energy prices and borrowing costs would bite [Source: Streamlinefeed].

Sources: BBC Business, FXStreet, Bloomberg, Sky News, Streamlinefeed, CNBC, ExchangeRates.org.uk, Vanguard UK