Upbeat Data Boost UK Recovery Hopes For 2010

The data backs government and Bank of England forecasts that the economy, which unlike the euro zone and United States remained stuck in recession in the third quarter, returned to growth towards the end of 2009.

The figures also strengthened expectations that the Bank will not extend its asset purchase programme designed to boost money supply and promote lending once the 200 billion pound target is reached in early February.

"It's been a strong start to the year for UK domestic data," said Philip Shaw, economist at Investec. "While the Monetary Policy Committee has left the door ajar for more quantitative easing, we think it is more likely that 200 billion will be the final total."

British manufacturing activity expanded at its fastest pace in more than two years in December, according to the CIPS/Markit purchasing managers' index which rose to 54.1 last month, after a surprise fall to 51.8 in November.

Read more...