Britain may have come out of recession more than two months ago, a leading economic think tank suggested.

The economy's gross domestic product grew by 0.1pc in May following a similar increase in April, according to estimates released on Wednesday by the National Institute of Economic and Social Research (NIESR).

"The monthly figures are inevitably erratic but the picture is coherent with the broader picture of stabilisation which has emerged since we first suggested that output had started falling," said Martin Weale, director at NIESR.

In the three months to the end of May, the pace of economic decline slowed, with GDP falling 0.9pc compared with a 1.5pc drop in the three months to the end of April, according to NIESR estimates.

The estimates from NIESR underline the fact that the recent flurry of data has shows signs of the economy stabilising. However, few economists are predicting a strong recovery with unemployment rising, the banking system still weak and consumer spending remaining subdued.

Paul Tucker, a deputy governor of the Bank of England, said yesterday that it will not be until the Autumn that it will be possible to gain a clearer picture of the economic outlook.

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