Britain on the cusp of economic fightback

Britain appears to be on the verge of economic recovery amid signs that the most brutal economic downturn in decades may be coming to an end.

Manufacturing output and house prices rose and the service sector yesterday reported its strongest spurt of growth for 17 months.

The upbeat data fuelled speculation in the City that the Bank of England would give a further sign today that the economy is on the mend and end its policy of quantitative easing, the process of injecting money into the economy to jump-start growth, which has so far cost £125 billion.

Business leaders made last-ditch pleas to the Bank to do more to guarantee a decisive economic resurgence, but many City experts were betting that it would show its confidence in an early end to recession by putting the scheme on hold at noon today

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The positive news on the economy will be welcomed by Gordon Brown, whose hopes of keeping Labour in power at the next election will largely depend on the economic outlook.

Sushil Wadwani, a former member of the Bank’s rate-setting committee, told The Times that it should halt the policy for the moment. “The short-term economic outlook is strongly positive,” he said.

Dr Wadhwani, who also sits on The Times’s panel of economic experts, is usually noted as an advocate of aggressive moves to boost growth, but he said that printing more money could cause an unwarranted inflation scare.

Official figures showed that Britain’s factories and utilities increased their output by 0.5 per cent in June, turning in their strongest showing since October 2007.

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