THE economy grew by an as-expected 0.3 per cent in the last quarter, official figures have shown.

Data from the Office for National Statistics (ONS) showed GDP in the second quarter of 2001 grew 0.3 per cent, a drop from the 0.5 per cent recorded in the first quarter.

The figures are unrevised from last month's second quarter estimate of 0.3 per cent.

Economists said that although the headline number was the same as last month, underlying data gave further evidence of Britain's two speed economy.

Simon Rubinsohn, chief economist at stockbroker Gerrard, said: "The numbers are pretty much in line. But what it highlights is the unbalanced nature of the economy."

He said the figures, which showed a weak manufacturing sector and a relatively buoyant service sector, would make it difficult for the MPC to set interest rates.

Growth in service industries was up 0.8 per cent, while manufacturing dropped two per cent