Industry boosts Britain's economy

Manufacturing, mining and quarrying are helping stoke growth

The UK economy has grown at its fastest pace in nearly four years, driven by a recovery in the industrial sector.

Gross domestic product (GDP) rose by 0.9% in the three months to June, up from a 0.7% gain in the previous quarter, government figures show.

That pushed the annual rate of expansion to 3.7%, the quickest since the third quarter of 2000.

Firday's data is likely to fuel expectations of a further rise in UK interest rates during August.

Factory gains

The Bank of England has already raised the cost of borrowing by 100 basis points since November last year to 4.5% in an attempt to cool consumer demand and the booming housing market.

Separate figures from the Office for National Statistics (ONS) published on Thursday, showed that UK retail sales jumped by 1.1% in June, compared with 0.7% in the previous month.

Howard Archer, an economist at Global Insight said that: "A 25 basis point interest rate hike in August must now be a done deal".

He went on to say that Global Insight expects borrowing costs of as much as "5.25% by the end of the year".

UK production rose by 0.9% in the second quarter - the fastest rate in nearly five years - boosted by gains in the manufacturing, mining and quarrying sectors.

That followed a 0.5% contraction in the figure during the previous quarter, the ONS said.

Meanwhile, service sector output also rose by 0.9%, mirroring the previous quarter's rise, and taking the annual rate of growth to 4.0%.