Economists have tipped the Bank of England to raise interest rates next month following unexpectedly strong sales and output figures.
Analysts say the bank's monetary policy committee (MPC) is likely to raise base rates by at least 0.25 per cent after high street sales in December showed their highest growth since May 2002, up 0.9 per cent against the previous month's 0.1 per cent.
There was further good news on the economy from output figures, which showed estimated gross domestic product (GDP) rising 0.9 per cent in the fourth quarter of 2003 against the previous three months, its highest since the first quarter of 2001. The figure of 2.1 per cent for 2003 as a whole met Treasury forecasts.
The British government claims the data shows economic growth is clearly strengthening and that the underlying state of the public finances is strong and sustainable.
Analysts say the data comfortably exceeds expectations and will further increase the chances of a rate move at the MPC's February meeting.