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Last Updated: Friday, 19 October 2007, 09:13 GMT 10:13 UK
Services lift UK economic growth
Customers in bar
Services - such as restaurants, bars and hotels - fared well
The UK economy grew at its fastest annual pace in more than three years between July and September, data shows.

Gross domestic product (GDP) grew by 0.8% from the previous quarter, the Office for National Statistics said.

The annual rate of growth stood at 3.3% during the period, above expectations of 3.1%, and the strongest rate since the second quarter of 2004.

Growth was driven by expansion in the service sector, particularly in hotel, restaurant and retail businesses.

The growth data comes on the back of this week's upbeat retail sales and labour market figures.

The Bank of England may now put on hold any further interest rate cuts - as policymakers wait to see how financial market turmoil will impact on the wider economy.

"It is surprising that GDP held up at 0.8% on the quarter and particularly surprising that the services sector seems to have accelerated," said Philip Shaw at Investec.

"The prospect of an interest rate cut this year looks a little less certain than it did."

The ONS added that service sector growth accelerated by 1.0% during the period, driven by the distribution, hotels and restaurants sector, which includes retail.

On the downside, production growth slowed to 0.2% - driven by a drop in utilities and mining output.

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