The UK economy grew faster than expected in July, with artificial intelligence (AI) potentially playing a part in the surprise increase.

According to the Office for National Statistics (ONS), gross domestic product (GDP) rose by 0.4% during July, despite economists predicting no growth at all. This follows a 0.3% increase in June and no growth in May.

What's behind the unexpected growth?

Much of July's growth came from the services sector, particularly computer programming.

The ONS noted that IT businesses reporting the largest increases in turnover appeared to be linked to AI, although it's still difficult to put an exact figure on how much AI contributed to the economy's growth.

Other factors, including the warm weather and the football World Cup, may also have played a part.

Is the economy really getting stronger?

While the figures are encouraging, economists aren't entirely convinced that the improvement will last.

Capital Economics suggested that the resilience seen earlier in the year had continued into the second half, but warned that rising energy prices and borrowing costs could soon put pressure on growth.

KPMG also pointed out that the headline figure doesn't tell the whole story. Retail and hospitality activity actually contracted during July, with higher fuel costs and elevated mortgage rates continuing to put pressure on household finances.

It's a reminder that growth across the economy doesn't necessarily mean every business or household is feeling the benefit.

What happens next?

The figures were released shortly before the Bank of England's latest interest rate decision, which saw rates held at 3.75%, and ahead of Chancellor John Healey's first Budget in October.

Healey described UK economic growth as still fragile, although he pointed out that Britain had recorded the fastest growth in the G7 during the first half of the year.

For businesses, the figures offer some encouragement, particularly around the growing role of technology and AI. However, with costs and borrowing pressures remaining a concern, there's still plenty of uncertainty ahead.

If you're running a business and want a clearer picture of how your finances are performing, get in touch.

We can look at your figures and help you plan for what's ahead.