Britain's economy surges 0.8%

Britain's economy grew an unrevised 0

Britain's economy grew an unrevised 0.8 per cent in the fourth quarter in what was the fastest pace in more than two years as household spending rebounded sharply.

The Office for National Statistics said GDP in the past three months of 2006 was 3 per cent higher than a year ago, again unrevised from last month's initial estimate and the fastest rate since the third quarter of 2004.

Today's data showed consumer spending rose by a healthy 1 per cent on the quarter after the slowdown to a rate of 0.4 per cent in the previous three months.

Economists had predicted no revision to the headline numbers, but the figures are likely to reinforce expectations that interest rates are heading higher within the next few months.

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Growth for the year 2006 as a whole was left unrevised at 2.7 per cent.

Although the British economy has clearly recovered from the 2005 slowdown, growth remains unbalanced with services far outstripping the production sector.

In the fourth quarter, output of the services industries, which range from banks to hairdressers, rose 1 per cent on the quarter and 3.6 per cent on the year.

But the production sector shrank 0.2 per cent as manufacturers failed to boost output.