According to the Office of National Statistics, the British economy grew at a rate of 3 per cent for the first quarter of 2007.
The Governor of the Bank of England, Mervyn King commented that the output growth had remained stable.
Our view
Interest rates have subsequently increased in May and July and we are currently at 5.75 per cent. We believe this will have taken the heat out of the economy. Trend growth target is 2.5 per cent and whilst these rate rises should slow growth to the target level, they may not. We anticipate one further interest rate hike in the either September or October and we believe that will be the ceiling for rate rises.