Britain's economy picked up speed in the second quarter after a slow start to the year, forecasters at the National Institute for Economic and Social Research have said

NIESR estimated that gross domestic product in the three months to June was 0.7 per cent higher than in the previous three-month period, up from 0.6 per cent in the three months to May.

In annual terms, growth was 2.7 per cent, it said.

"This robust rate of growth exceeds that of the economy's potential over the same period, and so suggests spare capacity continues to be absorbed," NIESR said.

The body believes if this rate of growth continues interest rates will start to rise in the first quarter of next year.

"Consistent with this, we expect the Bank of England to begin increasing Bank Rate in early 2016, most likely coinciding with the February Inflation Report," it said.

"Of course, risks to this outlook persist, not least the ongoing Euro Area saga."

The economy grew by 0.4 per cent in the first three months of 2015.