Data released by the Office for National Statistics (ONS) on Thursday show the United Kingdom's economy expanded by 0.4% in the second quarter. Almost half of that growth came from the information and communication sector, putting it ahead of all other industries.
Within the sector, software development, consultancy and related activities performed particularly strongly: these activities grew by 3.7% quarter-on-quarter, following a 3.8% rise in the previous quarter. The ONS said the expansion was driven in part by increased demand for IT equipment, especially computer hardware.
Investment figures also point to the impact of artificial intelligence (AI). Spending on machinery and equipment rose to £22.1 billion in Q2, approaching a one-off peak reached in early 2022, a level that had been influenced by the timing of tax incentives.
The AI-related manufacturing segment also gained momentum: production of computers, electronic and optical products increased by 10.7% year-on-year in the second quarter. That made this sub-sector the fastest-growing among the 13 manufacturing sub-sectors for the first time since early 2017.
Andrew Wishart, head UK economist at Berenberg, said the surge in investment into information and communication technologies suggests that building the computing capacity needed to run AI has given a material boost to business investment.
An ONS spokesperson added that rising demand for IT equipment — particularly computer hardware — and increased government defence spending were key contributors to the higher outlays on machinery and equipment.
On the policy front, Prime Minister Andy Burnham, who took office in July, has made AI a cabinet-level priority. His government emphasizes strengthening UK-owned development, technological sovereignty and worker protections, shifting away from the previous administration's more US-focused approach.
This article is based on reporting by Reuters. The accompanying illustration is credited to Getty Images.
