Economy grows at fastest rate since 2007

The pace of expansion slowed slightly to 0.7% in the fourth quarter after the construction sector shrank due to a poor performance in November.

But the figures from the Office for National Statistics (ONS) suggested that the UK has now recovered the lion’s share of gross domestic product (GDP) lost during the recession.

ONS chief economic adviser Joe Grice said: “We have now seen four successive quarters of significant growth and the economy does seem to be improving more consistently.

“Today’s estimate suggests over four-fifths of the fall in GDP during the recession has been recovered, although it still remains 1.3% below the pre-recession peak.”

In 2007, the last year when the pace of growth was faster, the economy grew by 3.4%. In 2012, growth was just 0.3%.

Today’s figures show the scale of improvements in the economy’s prospects, a year after it was feared that the country was about to sink into an unprecedented “triple-dip” recession.

They provide the latest boost for Chancellor George Osborne after the International Monetary Fund recently upgraded its forecast for growth in Britain - just months after the body told the Government it should rethink its austerity strategy.

But the surprise pace of growth in 2013 saw the economy grow by 0.5% in the first quarter and 0.8% in the second and third three-month periods of the year.

The estimated fourth-quarter figure of 0.7% marks a slowdown as the overall performance was dragged down by the construction sector, which shrank by 0.3%.

This was largely the result of a 4% slump in November - which has previously been disclosed - despite support from Government schemes such as Help to Buy.

Construction remains 11.2% off its pre-recession level in the first quarter of 2008.

Manufacturing improved by 0.9% in the fourth quarter. The sector remains 8.2% off pre-crisis levels.

Services, which represent three quarters of UK economic output, improved by 0.8%. It is now above 2008 levels.

Mr Osborne said: “These numbers are a boost for the economic security of hard-working people.

“Growth is broadly based, with manufacturing growing fastest of all.

“It is more evidence that our long-term economic plan is working.

“But the job is not done, and it is clear that the biggest risk now to the recovery would be abandoning the plan that’s delivering jobs and a brighter economic future.”

Prime Minister David Cameron tweeted: “The GDP figures are another sign our long-term economic plan is working - more growth means more jobs, security and opportunities for people.”