The UK's economy is continuing to grow at its quickest rate for nearly two years.

The Office for National Statistics (ONS) estimated that gross domestic product (GDP) in the last quarter of 1999 rose 0.8% on the previous three months.

It was also 2.7% higher than a year ago - the largest year-on-year increase since the first quarter of 1998.

It is the 30th quarter in succession without a fall in output, in fact since the end of the 1992 recession.

That is the longest period without 'negative growth' - a shrinking of the economy - since the 1970's.

The strong growth of the service sector drove the economy during the final months of 1999, although the manufacturing industry recovered as well, growing faster than in the proceeding three months.

The figures were broadly in line with economists' expectations but could be revised later because they are the first estimate.

The UK's economy is growing at a rate of about 3.5%, well above the 2.25% annual expansion it has averaged over the past 40 years.

Three times forecasts

The continuing robust growth is likely to add further ammunition to those hawks at the Bank of England who want to raise interest rates again.

They fear that such high levels of growth will eventually lead to a rise in inflation.

The fourth quarter figure meant the economy grew by 1.9% in 1999 as a whole, not far short of the 2.2% figure for the previous year, and three times the average forecast made just a year ago in the City of London.

Service sector output increased to 0.9% on the quarter from 0.6% in the third quarter with the distribution and catering industries continuing to record moderate growth.

The figure for 1999 is lower than the current rate of growth, because of a sluggish performance in the first half of the year.

Manufacturing surprise

Then, there were fears that the UK would be sucked into a global recession, caused by the world financial crisis that had swept Asia, Russia and Brazil.

The Chancellor Gordon Brown was widely criticised when he predicted economic growth of about 1% to 1.5% in his budget last year.

Instead the economy recovered faster than even he expected and is now set to grow by more than 3% this year - its best performance for decades.

The remarkable recovery of the manufacturing sector has been one of the main surprises of 1999.

Despite the high pound, which makes exports more expensive, manufacturing growth actually exceeded the growth in the rest of the economy by the end of the year.