Economy: Recovery now gathering pace

The National Institute for Economic and Social Research (NIESR) said its estimated quarter-on-quarter hike in gross domestic product (GDP) was "the first real indication that the economy is growing at around its trend rate".

NIESR's May calculation comes after it said GDP rose 0.7 per cent in the three months to April. But the group warned that severe Government austerity measures to cut the public debt could hamper the path of recovery.

The debt crisis across Europe could also knock UK growth, with a strengthening pound adding to export pressure, according to NIESR.

It said that, while there had been "a clear improvement to UK growth", there are "a number of factors which will impede growth in the coming months".