Faisal Islam: Why the UK economy is surprisingly resilient

Image source, Getty ImagesPublished12 November 2026, 13:26 GMTUpdated 2 minutes agoThe UK economy grew at its fastest rate for more than two years in the three months to September."Top gear" and "strikingly strong" were among the descriptions of the 0.7% growth offered by the economists who track every minor murmur of Britain's economy.It is an upgrade on "solid" and "resilient", and in turn a world away from "hardest hit by the Iran War".Against the backdrop of the world's biggest disruption to energy flows, rising market borrowing costs - and the cruel summers since the pandemic - it is impressive growth. It should reset some of the swirl of self-reinforcing negativity. The UK's economic growth has averaged less than 0.1% in the four Q3s [ie July to September] since the pandemic. The average prediction just months ago for this July to September was just 0.1%. Even the UK's official forecaster the Office for Budget Responsibility (OBR) effectively pencilled in 0.3% at the Budget just 3 weeks ago. This figure has not been exceeded outside the pandemic since 2017. It puts the UK on course to be the second fastest growing economy after the US across the major G7 countries which also includes Canada, Japan, Germany, Italy and France.It is tempting to think about what the economy would have done if the Iran War hadn't happened. If interest rates had been cut instead of their recent rise.Not a boomWhile the latest figure kills the doom, it is clearly not a boom either. Spending on AI and tech have driven the surprise upside over the year. While the AI data centre boom may at any point turn to bust, these figures suggest that spending across the economy on investing in these technologies is helpingboost growth. Consumers have been resilient, at least till the autumn, perhaps helped by better economic vibes.While there has been an understandable focus on high UK borrowing costs, another measure of the international standing of the UK economy, sterling's value, reached post Brexit referendum highs last week. Productivity and investment is also looking stronger, especially after recent revisions. Some of the most encouraging figures are in private sector business investment.I spoke to the chancellor at Nexeon in Oxfordshire, which is searching for a UK factory to manufacture its cutting edge electric vehicle battery - and British - technology. My colleagues visited British watchmakers in Maidenhead carving out a niche to take on the Swiss.However, this may well not last for the final three months of the year.Consumer confidence has already fallen as petrol and domestic energy prices start to rise again.There is a significant challenge with everyday cost-of-living pressures in the coming months. Construction and private house building remain depressed. The Iran conflict remains the big unknown and whether post the US midterm elections there could be a durable end to the conflict in the Gulf. Some oil and gas production there is starting to normalise. It could bring down petrol prices, energy bills, government borrowing costs, and mortgage costs too. Expect to see Downing Street investing heavily in "settlement of the conflict", which the chancellor told me is the "best economic policy".Related topicsUK economyEconomic growthOffice for Budget ResponsibilityEconomicsGDPMore on this storyGlobal stocks plunge as fears over US AI slowdown spread to Asia and EuropePublished6 days agoUK economy grows at fastest rate for more than two yearsPublished2 hours ago