The UK economy grew at its fastest pace in two years in the second quarter, driven by robust service sector growth, according to official data released on Friday.

In its preliminary calculation of gross domestic product, the Office for National Statistics said output expanded by 0.8 per cent between the beginning of April and the end of June, compared with the previous quarter. Against the same period a year ago output grew by 2.6 per cent.

The numbers suggest the UK economy is growing above its long-term trend rate.

..............The main driver of growth was the service sector, which grew by 1 per cent in the second quarter and which accounts for about 74 per cent of the nation's economy. Within services the distribution, hotels and restaurants sector was particularly strong, growing by 1.2 per cent, a surge the ONS said was caused by accelerating activity among retailers. The contribution of the High Street to growth reflects the World Cup related shopping boom and a further football effect could be seen in sturdy growth in public houses and bars as fans fuelled their support then drowned their sorrows.

..............."Above-trend growth in the second quarter will boost expectations that the Bank of England could raise interest rates as early as August," said Mr Archer [of Global Insight]. "However, given the significant uncertainties about the longer-term growth outlook and the current continuing lack of evidence that high energy prices are having marked second-round inflationary effects, we suspect that the Bank of England will continue to hold fire on interest rates in the near term at least.