Britain's Economy Grows 0.7%, Its Fastest Pace in Two Years, as Tech Spending Powers Services

Britain's economy grew 0.7% in the third quarter, its fastest quarterly pace in more than two years, according to figures from the Office for National Statistics released Thursday. The gain covered July through September and was in line with what forecasters expected, Euronews reported.

The engine was technology. Computer programming and consultancy helped lead the way as demand for artificial intelligence and cloud computing climbed, Euronews reported. The statistics office said the growth was "almost entirely due to strong and widespread growth in the services sector," the BBC reported.

That came despite a real headwind. The Iran war pushed up energy costs over the period, Euronews noted, which makes the services-led gain more impressive.

For a country that has gone more than two years without a quarter this strong, the report is a welcome change.

The details carry a lesson. The strength did not come from a new government program. It came from private companies spending to build and sell the digital services customers want. That is worth remembering on both sides of the Atlantic: when businesses have room to invest, they hire, build and compete, and the whole economy feels it.

It is also a reminder for Washington, where the debate over taxes and regulation on technology investment is far from settled. The British numbers suggest that when capital flows into new tools and services, growth follows, even in a country that has struggled to find it.

The good news complicates life for the Bank of England. The central bank recently raised its benchmark rate from 3.75% to 4%, GB News reported.

Stronger growth gives the bank less reason to reverse that move soon. Even so, some lenders are adjusting their own pricing: Barclays cut mortgage rates by as much as 0.4 percentage point across a range of products for buyers and those remortgaging, according to GB News.

For British families, that is the tension in a single snapshot. Growth is picking up while borrowing costs remain higher than they were, which means household budgets stay tight even as the headline numbers improve.

The United States is still running faster. The American economy grew at a 3.4% annual rate in the third quarter, according to the advance estimate from the Commerce Department's Bureau of Economic Analysis.

The two numbers are not measured the same way. Washington reports growth as an annualized rate, while London reports the change from one quarter to the next. Compounded over a full year, Britain's 0.7% quarter works out to roughly 2.8%, a strong result by recent British standards but still behind the American pace.

For American investors, a healthier Britain is good news. Britain is one of America's closest allies, and a stronger British economy means more demand for the goods, services and technology American companies sell. A steadier Britain also helps the broader Western economy weather the energy shock from the Middle East.

The bigger question is what Prime Minister Andy Burnham's government does with the momentum. Burnham has pitched an upcoming summit with the European Union as an "opportunity to add to UK growth," GB News reported.

Not everyone is convinced. GB News reported that the roughly 15 billion pound arrangement could tie 98% of British companies to rules set in Brussels, even though those firms do not export goods to the bloc. Britain's best quarter in two years was built by its own innovators, not by closer ties to European regulators, and skeptics will ask why London would trade that freedom away.

The next tests come quickly: the summit with Brussels, the Bank of England's next rate decision, and fresh monthly figures that will show whether the summer surge carried into the fall. For now, Britain has a rare piece of good economic news, and a reminder that private enterprise, not government planning, still does the heavy lifting.