The economy picked up pace in the three months to June, recording a sixth consecutive quarter of above-average growth and boosting expectations that further interest rate rises will be needed to curb inflation.

Gross domestic product rose by 0.8% in this quarter and by 3% compared with the same period a year earlier, according to the Office for National Statistics (ONS).

David Brown, economist at Bear Sterns, said: “Since the bulk of growth comes from consumer spending, it leaves domestic demand at risk of over-heating with negative consequences for inflation. It would be no surprise if the Bank of England is straining on the leash for another hike in rates.”

The impressive growth record has boosted tax receipts and lifted employment to record levels, but it has also created a challenge for the Bank of England, charged to ensure growth does not spur runaway inflation. However, many including the Financial Services Sector also believe that the economy has peaked and is set to slump.