United Kingdom economy stronger than expected in boost for Carney's rate hike plan

City economists had forecast growth of 0.3%.

The better-than-expected data suggests that the Bank of England's anticipated move to raise interest rates to 0.5 percent in November remains on course. Threadneedle Street has faced a slew of warnings against raising the cost of borrowing, amid growing concerns over the strength of the economy - which could be allayed by the latest data.

The FTSE 100 was down 0.4% to 7,498.25 in mid-morning trade. A strong performance in computer programming, motor trades and the retail trade ensured it was the main driver of growth overall.

Manufacturing also boosted the economy with an improved performance after a weak second quarter. Meanwhile, construction contracted for the second quarter in a row.

The largest contributor to growth in services was the business services and finance sector, which grew by 0.6%, while the positive contribution from production (up 1% in the quarter) was attributed to strength in the vehicle manufacturing output in July, which increased by 3.8%.

While the latest GDP figures will likely bring them some comfort, there could still be storm clouds ahead.

The economy grew by 0.3 per cent per head between April and June as growth outpaced the rising population.

Dire predictions of a collapse in GDP after the Brexit referendum have failed to come true as consumer confidence has remained strong in the wake of last year's vote. That has led the service sector to record growth of about one- or two-tenths slower this year.

It has also ranked lowest among European Union economies.

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