Britain's economy grew at its fastest annual pace in two years in the third quarter of 2006.
The Office for National Statistics said on Friday that GDP rose by 0.7 per cent in the three months to September, confounding market forecasts of a slowdown to 0.6 per cent and lifting the annual rate to 2.8 per cent.
That was the fastest yearly pace since the third quarter in 2004 and marked the fourth consecutive quarter of growth running above its long-run trend. Growth in 2006 now looks set to exceed Chancellor Gordon Brown's budget forecast of 2.0 to 2.5 per cent.
Markets had already been almost fully pricing in interest rates rising by a quarter point to 5.0 per cent next month. The pound rose a third of a cent after Friday's figures as investors became even more confident that borrowing costs were headed up.