By Svenja O’Donnell Feb. 26 (Bloomberg) -- Britain emerged from recession at a faster pace than previously estimated in the fourth quarter as services output jumped, providing a boost for Prime Minister Gordon Brown as he prepares for a general election within weeks. Gross domestic product rose 0.3 percent from the third quarter, compared with a previous calculation of 0.1 percent growth, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 27 economists was for a 0.2 percent increase. Brown is seeking to persuade voters his Labour government has the best policies to cement the recovery. The Conservatives’ poll lead has narrowed to as little as six percentage points as ministers argue that David Cameron’s plan to cut spending this year risks plunging the economy into a “double-dip” recession. “Today’s figures should help to alleviate some of the gloom and uncertainty that descended on markets about U.K. economic prospects,” said Philip Shaw, chief economist at Investec Securities in London. “It will help Brown. We’ll see a slow and steady momentum building up in growth through 2010.” The pound was little changed at $1.5256 at 10:04 a.m. in London. Government bonds fell, with the yield on the 10-year benchmark rising 3 basis points to 4.06 percent. The two-year yield was little changed at 0.94 percent. The upward revision came as services growth was revised to 0.5 percent, the biggest gain since the first quarter of 2008, from a previous estimate of 0.1 percent, the statistics office said. Industrial production growth was revised to 0.4 percent from 0.1 percent, with manufacturing rising 0.8 percent instead of 0.4 percent. Consumer Spending Consumer spending rose 0.4 percent, the biggest increase since the first quarter of 2008, and government spending gained 1.2 percent. Fixed capital investment fell 3.1 percent on the quarter. Revisions to previous quarters meant that the economy shrank 6.2 percent since the first quarter of 2008, making the recession the deepest on record. The figures may ease concerns that the economy may struggle to maintain momentum in the first quarter after heavy snow disrupted business and a temporary cut in value-added tax expired on Dec. 31. Chancellor of the Exchequer Alistair Darling “has always said that the economy would return to growth by the turn of 2009 and today’s second estimate continues to bear that judgment out,” said a spokesman for the Treasury who declined to be named. “Withdrawing the support that has helped us get to this point would put the recovery at risk.” Deficit Pledge Darling has pledged to delay cutting the deficit until 2011, saying Conservative plans to start this year may wreck the recovery. At more than 12 percent of GDP, Britain’s budget deficit is on a par with that of Greece. While Brown has until June to hold the election, Labour Party documents point to a vote to coincide with local authority polls on May 6 -- less than two weeks after the statistics office publishes its preliminary estimate of first-quarter GDP. Britain was the last Group of Seven to exit recession, and policy makers say the recovery is far from assured as credit strains persist. The Bank of England last week cut its forecast for growth this year to 1.4 percent from 2.2 percent and Governor Mervyn King left the door open to expanding its 200 billion-pound ($300 billion) asset-purchase program if needed. Bank of England policy maker David Miles said yesterday that “the strength of any prospective recovery is highly uncertain.” To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net.

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