Moneyfarm’s Richard Flax: UK GDP beats expectations with 0.7% growth as services and AI lift the economy

The UK economy has once again proved more resilient than expected. Richard Flax, Chief Investment Officer at Moneyfarm, said today that output grew by 0.7% in the third quarter, clearly above the relatively modest forecasts made at the start of the period.

Services and technology drive the expansion

According to Flax, the expansion was supported above all by the strength of the services sector. He also highlighted the role of artificial intelligence and technology in the quarter's performance.

The contribution of artificial intelligence and technology suggests that investment in these areas is starting to produce tangible effects on the economy.

Richard Flax, Chief Investment Officer, Moneyfarm

Can consumers sustain the momentum?

For households and investors, the key question now is whether this momentum can be maintained. Consumers have so far shown remarkable resilience despite higher energy prices and rising financing costs, but Flax noted that these pressures have not gone away.

Price pressures were already in focus in September, when Flax flagged a rise in UK headline inflation to 3.1%, driven largely by transport and fuel costs.

A more favourable backdrop heading into 2027

Looking ahead, Moneyfarm's CIO sees room for a more supportive environment, provided growth holds up and inflation continues to ease.

If growth continues to prove solid and inflationary pressures gradually ease, the United Kingdom could benefit from a more favourable environment, both for household finances and for domestic assets, heading into 2027.

Richard Flax, Chief Investment Officer, Moneyfarm