Britain's economy probably grew by 0.5 per cent in the three months to December in what was its fastest rate in four months, the National Institute of Economic and Social Research said today.
The think tank noted signs of a pick-up in retail sales and manufacturing, which led to its strongest growth estimate since August 2005.
It estimated a 0.4 per cent expansion for the three months to November. "We expect to see this improvement carry through into the current year with growth returning to its trend rate. The figures do not make a case for an interest rate reduction," the institute said.
The Bank of England held interest rates at 4.5 per cent at its January meeting yesterday - the fifth straight month of stasis after a quarter-point cut in August 2005.
There is a growing view that borrowing costs will stay at that level for some time, given signs of an upturn in some sectors of the economy.
Official data yesterday showed factory output grew at its fastest pace in seven months in November; recent surveys have indicated retail spending, the housing market and the services sector are picking up.