The Bank of England is almost certain to raise interest rates next month, analysts said yesterday after official figures showed the British economy expanding at a "scorching" pace.
Growth in the world's fourth-largest economy accelerated during the final quarter of last year at the fastest pace since the beginning of 2000, driven by strong domestic demand.
All 28 City economists surveyed by Bloomberg yesterday expected rates to rise by a quarter-point to 4 per cent.
This came after the Office for National Statistics said GDP rose by 0.9 per cent in the fourth quarter, above the 0.8 per cent forecast by both the market and the Bank's monetary policy committee.
This put growth over the whole year at 2.1 per cent, right on the government's estimate and up on the 1.7 per cent recorded in 2002.
"The latest figures clearly show that the economy has broken free from the period of uncertainty which has dogged world activity for most of the past five or six years and has now entered a period of above-trend growth," said Mr Philip Shaw, an economist at Investec in London.
The expansion was underpinned by the dominant service sector, where output increased by 1 per cent compared with the third quarter. This was largely due to strong retail sales, defying many shopowners' reports of a dismal Christmas trading period.
However, economists said seasonal adjustments could distort the figures, a warning underlined by the sharp disparity between the official numbers and anecdotal reports. - (Financial Times Service)
