LONDON (BLOOMBERG) - The British economy gathered momentum in April as shops, hairdressers and restaurants serving outdoors reopened for business after months of lockdown to fight the coronavirus.

Gross domestic product (GDP) rose 2.3 per cent from March, despite unexpected declines in manufacturing and construction, the Office for National Statistics said on Friday (June 11).

The gain left output just 3.7 per cent below its level in February last year before the pandemic struck.

The figures are likely to fuel speculation about when the Bank of England (BOE) might tighten interest rates. A rapid vaccination programme means the economy, which shrank the most last year since 1709, is now set for its strongest growth in decades.

Surveys indicate businesses are preparing to step up investment and households are splurging savings built up during more than a year of restrictions.

BOE chief economist Andy Haldane, who cast a lone vote last month for the central bank to scale back its stimulus programme, this week said inflation could remain above the 2 per cent target for longer than many assume.

His colleague Gertjan Vlieghe says policymakers could raise the benchmark rate as early as next year if the labour market recovers smoothly when the government's furlough support ends in September.

The expansion in April was the fastest in nine months, and the economy received a further boost in May with the reopening of the indoor hospitality and entertainment sector.

Prime Minister Boris Johnson is expected to delay the final stage of lockdown easing that had been planned for June 21 due to the spread of the highly transmissible Covid-19 Delta variant first identified in India.

Services grew 3.4 per cent, almost double the gain of the previous month, driven by a surge in retail sales. That helped the economy overcome declines in other sectors.

Industrial production fell 1.3 per cent in April after posting a larger gain the month before, largely because of plant closures and a slip in mining and quarrying activity. Manufacturing fell 0.3 per cent due to a drop in output in pharmaceutical products.

Construction dropped 2 per cent after a 5.8 per cent gain in March. Economists had expected growth across all sectors of the economy to produce a 2.4 per cent gain in GDP for the month.