UK 2003 growth revised up to 2.3%

The revised GDP figures should cheer the chancellor

Britain's economy grew by 2.3% last year, a faster pace than first estimated, official figures have shown.

The growth figure was revised upwards from the initial estimate of 2.1% after evidence of stronger exports of services and household spending.

Analysts said the new figure meant that another rise in UK interest rates could be on the cards.

Earlier this month the Bank of England raised interest rates to 4% to keep the economy from overheating.

Bounding ahead

The Office for National Statistics (ONS) figures showed that while the fourth quarter figure remained unchanged at 0.9% on the previous three months, year-on-year it grew by 2.8%.

We still expect the base rate to go up to 5% by the end of this year Richard Batley, Halifax

That was up from the 2.5% estimated last month, making it the strongest fourth quarter since 2000.

Jonathan Loynes, of consultants Capital Economics, said the revised figures would "underpin expectations of more rate rises to come".

"This obviously lifts the starting point for GDP growth this year and certainly lends some support to the strong growth forecasts of the Treasury and Bank of England," he added.

On target

Richard Batley, economist at Halifax, said the stronger figures had come as something of a surprise.

"We had expected a small downward revision because of weaker than expected industrial production numbers," he said.

"The latest GDP figures are consistent with our view that the economy is growing above trend. We still expect the base rate to go up to 5% by the end of this year."

The 2.3% expansion during 2003 means the growth rate came in the middle of the chancellor's 2.0 to 2.5% forecast made in last year's Budget.