LONDON, (Reuters) - Britain's economic growth continued its strong performance in the first three months of 2014 as households spent more and companies increased investment at the fastest pace in a year, official data showed on Thursday.
As initially estimated, gross domestic product between January and March grew by 0.8 percent from the last three months of 2013, the Office for National Statistics said.
In year-on-year terms, growth was 3.1 percent, also unchanged from last month's preliminary estimate by the ONS and the fastest rate of growth since the fourth quarter of 2007
Britain's economy remains 0.6 percent smaller than its peak in early 2008, but is likely to surpass that level in the current quarter.
Business investment grew 2.7 percent in the first quarter from the previous three-month period, the fastest rate of growth since the first quarter of 2013, adding 0.2 percent to GDP.
Net trade had no impact on growth, after adding 1.0 percent to GDP in the final three months of 2014.
Bank of England Governor Mark Carney has said a pickup in business investment is crucial if Britain's economic recovery is to get onto a firmer footing, and forecasts the economy as a whole will grow 3.4 percent this year, its highest rate since 2007.
Bank of England forecasts last week suggested that a first rise in interest rates was likely to be around a year away. But minutes of May's policy discussion released on Wednesday showed that some officials think the case for an earlier rate rise is getting stronger. [ID:nL6N0O721C]
Services output rose by 0.9 percent on the quarter, its strongest pace of growth since the third quarter of 2011. Industrial output was up 0.7 percent and construction grew by 0.6 percent.
Household spending, which accounts for nearly two-thirds of Britain's economic expenditure, rose by 0.8 percent, picking up speed from the end of last year.
The headline GDP numbers confirmed that Britain, until last year a laggard among the world's rich countries, now has one of the fastest-growing economies with an annualised growth rate of over 3 percent.
The figures will also buoy finance minister George Osborne as voting starts for local and European Parliament elections on Thursday.
Other figures released by the ONS on Thursday showed that public sector net borrowing in April, excluding one-off payments related to Royal Mail's pension plan and cash transfers from the Bank of England, totalled 11.5 billion pounds, up nearly 2 percent from the April last year.
April was the first month of the 2014/15 financial year, during which Osborne aims to reduce borrowing to 5.5 percent of GDP.
Revised ONS figures for the 2013/14 tax year showed borrowing totalled 107.4 billion pounds or 6.59 percent of GDP, down marginally from an original estimate of 107.688 billion pounds or 6.61 percent of GDP.
(Reporting by David Milliken and William Schomberg)
((UK Economics Desk; Tel: +44 20 7542 2774))