UK economy growing faster than expected

Continued strong activity in the services sector ensured the UK economy grew by slightly more than expected during the first three months of this year.

Estimates released today by the UK's Office for National Statistics (ONS) show GDP rose by 0.7% in the first quarter, in line with the final three months of last year but slightly ahead of the 0.6% forecast in the City.

That was despite output in the manufacturing sector falling by 0.3% and output across all production industries being flat on the previous quarter.

In contrast, the services sector expanded by 0.8% in the first quarter, following a rise of 0.9% in the fourth quarter of 2006.

Economists said today GDP’s figures reinforced expectations that interest rates will rise on May 10.