AI boom helps drive UK growth in July

The UK economy defied forecasts growing by 0.4% in July, heavily driven by the rapid growth of artificial intelligence and related technology sectors.

Economists had previously predicted zero growth for the month, but the figures delivered a welcome boost for Chancellor John Healey as he prepares for his first Budget.

According to data from the Office for National Statistics (ONS), the stronger-than-expected performance was largely down to the services sector, which grew by 0.4%.

Within that sector, computer programming, consulting, and administrative services stood out, with the ONS noting that many businesses reporting the largest turnovers were heavily involved in artificial intelligence and cloud computing.

Experts have welcomed the technology-driven surge as a vital sign of economic productivity. Martin Beck, chief economist at WPI Strategy, noted that at a time when traditional parts of the economy remain subdued, this represents “exactly the kind of productivity-enhancing spending the UK needs more of.”

Similarly, PwC’s chief economist, Barret Kupelian, pointed out that artificial intelligence continues to leave clear imprints across the wider economy, helping AI-exposed sectors record robust outputs.

Despite the positive headline figures, analysts warn that broader economic challenges remain. Ongoing global uncertainty – including the fallout from conflict in the Middle East – continues to drive up energy costs and government borrowing expenses, placing mounting pressure on household budgets and public finances.

However, July’s data underscores how digital innovation and the burgeoning AI sector are increasingly acting as a crucial shock absorber for the British economy.