The UK economy is set to outperform Gordon Brown's most optimistic Budget outlook in 2006, according to Bank of England forecasts published yesterday, indicating it expects economic growth of a robust 2.8 per cent this year and 3.1 per cent next.

The Bank's detailed growth forecasts indicate that the economy would have to fall back into the doldrums during the second half of the year for the annual growth rate not to exceed the chancellor of the exchequer's forecast of 2-2.5 per cent.