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Last Updated: Thursday, 21 December 2006, 10:58 GMT
UK economic growth strengthening
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Output is at its strongest for two years
The UK economy grew more strongly than first thought in the past quarter, expanding 2.9% compared to a year ago.

The upward revision for July to September, from an initial 2.7% estimate, may add weight to calls for a rise in interest rates early in 2007.

Rates were held at 5% last month but inflation still remains above the government's 2% target.

Other data showed a worsening in the balance of payments for the quarter, with the deficit rising to 9.4bn.

This was up from 8.3bn in the April to June period.

Rate pressure

On a quarterly basis GDP grew 0.7% in the past three months, according to the Office for National Statistics, unchanged from its initial estimate.

But one analyst said the upward revision in year-on-year growth put the UK on course to record growth of between 2.6% and 2.7% for 2006 as a whole.

"The upward revision may increase the Bank of England's concern about the lack of spare capacity in the economy, thereby adding to the growing pressure for an interest rate hike in the first quarter of 2007," said Howard Archer, chief economist for Global Insight.

However, Mr Archer added that he did not expect rates to exceed 5.25% next year.

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