Britain's economy grew slightly faster than previously estimated in the first half of 2007, but the global credit crunch could start to slow things down and spur the Bank of England into cutting interest rates.
The British Office for National Statistics confirmed gross domestic product (GDP) grew by 0.8 per cent in the second quarter of the year, but it revised up its estimate for first quarter growth to 0.8 per cent from a previously reported 0.7 per cent.
This meant the economy grew by an annual 3.1 per cent in the April-June period instead of the 3.0 per cent estimate published last month.
While that may exacerbate policymakers' concerns about a lack of spare capacity in the economy intensifying inflationary pressures, the central bank appears to be more focussed on the downside risks from the trouble in financial markets.
A new survey from the central bank also out today showed lenders expect to tighten credit conditions for companies significantly in the coming months as a result of the liquidity squeeze that has gripped global financial markets.
In comments published late on Tuesday, BoE Monetary Policy Committee member Andrew Sentance noted the economy was growing relatively briskly but said the central bank was closely monitoring the fallout from the credit crunch.
Many economists are predicting the BoE will cut interest rates from a six-year high of 5.75 percent in the next few months, ending a run of five hikes since last August.