THERESA May has revealed that she has begun the preparations for Britain's "orderly departure" from the European Union and suggested that what she was looking for was a bespoke deal that maintained the best economic relationship with the continent.

Her comments, made after talks with her Italian counterpart Matteo Renzi in Rome, came as Philip Hammond insisted the fundamentals of the UK economy were strong as the latest official figures showed that it had picked up pace in the run-up to the Brexit vote thanks to the strongest performance from industrial production since 1999.

Growth in the second quarter of this year was better than expected at 0.6 per cent compared to 0.4 per cent in the first quarter.

"We saw the strongest quarterly rise in production for nearly 20 years, so it is clear we enter our negotiations to leave the EU from a position of economic strength," insisted the chancellor.

But John McDonnell, his Labour shadow, said the figures bore little relation to the economic position of ordinary workers.

"Today's GDP figures provide a stark contrast with the grim news on real earnings which remain 10 per cent below their 2007 level. The Tories' failed austerity policy has produced a lost decade for earnings with ordinary households experiencing the worst decline in living standards in living memory," he added.

Analysts and business groups warned against using the second-quarter figure - which only included estimates of one week following the June 23 referendum result - to measure the impact of the Brexit result.

The British Chambers of Commerce cautioned that it was "far too soon to draw firm conclusions" about the UK's future growth prospects.

Last week, a snapshot of the economy in the weeks following the vote from the closely-watched Purchasing Managers Indexes pointed to a sharp fall in economic activity following the Brexit vote.

The National Institute of Economic and Social Research said the economy seemed to be heading towards a "significant deterioration" in the second half of this year.

In Rome, in the latest of her trips abroad to meet her counterparts and which are set to continue in the coming days, Mrs May stressed how she and Mr Renzi were clear on the importance of “maintaining the closest possible economic ties once the UK leaves the EU”.

Italy is the UK's eighth largest export market and trade in goods was worth £24 billion last year.

The PM said she had an "open mind" about Britain's future outwith the EU but stressed: “We should be developing the model that suits the United Kingdom and the European Union, not adopting necessarily a model that's on the shelf already."

Mrs May reiterated her insistence that the UK must be able to control immigration but also get the "best possible deal" in terms of the economy.

The PM, who revealed she had chaired the first meeting of a cabinet committee on exiting the EU to "prepare and plan for an orderly departure," added that it was important to ensure "we can maintain that economic relationship which has been of benefit to us in the past and we want to ensure that we can continue and build on it in the future".

In other developments:

*Projections from the Centre for Economics and Business Research suggest the price of the average UK home will still be around £40,000 more at £234,000 in five years' time despite "tremors" caused by the Brexit vote;

*Mr Hammond announced a "major boost" to transport infrastructure with a £344 million expansion of London City airport, which will create 1,600 airport jobs and will "potentially add £1.5bn to UK economy by 2025";

*GSK said it was investing £275m in its three UK manufacturing sites, including Montrose in Scotland, dubbing the UK an "attractive location";

*Food outlet McDonald's announced it was creating 5,000 jobs by the end of next year; and

*ITV said it was cutting £25m in costs next year because of the Brexit vote.

Elsewhere, Michel Barnier, the former French government minister and ex-European Commission vice-president, regarded by many as an arch-federalist, has been appointed as the commission's chief negotiator for Brexit.