UK economy tops growth estimates

Higher industrial output is boosting growth

The UK economy expanded faster last year than previously estimated, the Office for National Statistics has said.

The economic growth rate for 2004 has been revised upwards from 2.8% to 2.9%, due to higher industrial output.

The economy grew 0.7% in the final quarter in 2004 - which was stronger than the previous quarter's 0.5% growth - but weaker than forecasts of 0.8%.

Strong growth increases the chances of further interest rate rises.

Household spending fell in the final quarter to pre-Iraq war levels.

This was the result of people buying less durable and semi-durable goods, the ONA said.

However, the body said lacklustre household expenditure was offset partly by an increase in government spending and investment.