THE performance of the UK economy in the third quarter of the year proved stronger than expected after a second upward revision to gross domestic product (GDP) figures.

GDP rose 0.8 per cent on the previous three months - higher than the 0.6 per cent estimated by the Office for National Statistics (ONS) two months ago.

The latest revision, which follows an increase to 0.7 per cent last month, comes after higher estimates on sectors including insurance services.

However, the news for Chancellor Gordon Brown was not all good as the UK's current account showed a deficit of £8.1bn in the quarter.

This was higher than forecast in the City and compares with a figure of £7.8bn for the second quarter.

The ONS said a balance of payments deficit of £5.9bn was recorded with EU countries, while the figure for non-EU countries stood at £2.2bn.

The widening of the current account deficit comes after lower interest rates helped stimulate demand in the UK for imported goods.

Investec economist Philip Shaw believes the deficit could reach about £25bn for the year.

He has also edged up forecasts for GDP in 2003 to 2.2 per cent - ahead of the 2.1 per cent indicated by the Chancellor earlier this month.

Mr Shaw said: "Today's upward revision provides even more evidence that the UK economy is recovering."