When it comes to forecasting the economy, Gordon Brown's brooding exterior masks a sunny optimism. Time and again, he has offered a bright outlook only to come out with downgrades and forecasts of better times.

Yesterday was different. For the first time in eight years, he was able to say the economy this year would grow faster than he had expected in March's budget. He raised his forecast to 2.75 per cent from 2-2.5 per cent and his assessment of how fast the economy can grow without pushing up inflation.

Even more satisfying for the chancellor was that growth this year has been better spread between the consumer and business sectors - the elusive rebalancing of the economy appears to be under way.

Growth turned out better than Mr Brown expected because investment rose by 6 per cent this year against the forecast 1.75-2 per cent in the budget.

Manufacturing has also been stronger as has growth in exports, thanks in part to a strong rebound in growth and demand in the eurozone, the UK's main trading partner.

While the impact of carousel fraud has made data difficult to interpret, net trade appears to have made a small contribution in 2006 after years in which it slowed growth. Consumer spending has also strengthened after a slow start but its growth rate is still lower than that projected in the budget.

Last week, Bank of England governor Mervyn King said: "I think we are beginning to see some rebalancing and that would be desirable."

The main question now is whether this rebalancing will continue. Yesterday's industrial production numbers disappointed but the Treasury has forecast an acceleration in output next year and robust investment to contribute to above-trend growth of 2.75-3.25 per cent.