Hopes that the UK economy might achieve an elusive `soft landing` and avoid recession were buoyed yesterday by official figures showing that it grew unexpectedly strongly in the final three months of 1998 albeit at its slowest rate for six and a half years.

But the figures leave the outlook uncertain. Though the resilient service sector kept the economy growing, analysts believe it will continue to flirt with recession over the next few months.

The more pessimistic observers expect national output to shrink through the first half of this year, as companies try to shed excess stocks of unsold goods. Recent aggressive interest rate cuts by the Bank of England, the central bank, are expected to revive growth later in the year.

Yesterday's figures, though, raised hopes that the economy could sustain positive growth throughout the year. Adjusting for normal seasonal patterns, national output grew by 0.2 per cent in the fourth quarter, according to the government's Office for National Statistics.