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The UK was on course today to be the first European country to pull out of recession amid signs that the economy returned to growth last month.
A major survey showed output increased in May after 14 months of decline, raising hopes that the recession will be over by the autumn.
The index of activity in the combined construction, manufacturing and services sectors rose to 50.4 — the first time since March last year it has risen above the 50 level, which is the cut-off between boom and bust.
George Buckley, chief UK economist at Deutsche Bank, said it marked “a watershed in the UK recovery story” but warned the bounce could be short-lived.
The 50.4 reading was well above the 46.0 seen in France, 44.1 in Germany, 42.6 in Italy and 39.6 in Spain.
“The UK is the first of the European economies to see a return to economic growth,” said Chris Williamson, chief economist at Markit, who helped to compile the purchasing managers' index survey.
He said rival European economies were still “firmly mired in contraction” and forecast no growth in the eurozone until August at the earliest.
Colin Ellis, European economist at Daiwa Securities, said: “Today's reading is probably the first genuine bit of good news on activity for many months, as opposed to what could be described as less bad' data.”
The pound rose 0.37 cents against the single currency to 1.1617 as Britain firmly laid to rest its “sick man of Europe” tag.
It came as the Bank of England met to consider its next move in the fight against recession. Having last month left interest rates unchanged at 0.5% and extended its quantitative easing programme by £50 billion to £125 billion, it is not expected to make any major changes tomorrow.
The rise in the all-sector PMI in the UK came after in the index for the services sector, which includes hotels and restaurants, stockbrokers and accountants, jumped from 48.7 in April to 51.7 in May.
James Knightley of ING said: “It looks increasingly possible that the UK will see growth in the third quarter. This would be a remarkable turnaround for the UK economy. Nonetheless, there are ongoing headwinds which will mean the recovery will be mild rather than vigorous.”
The economy has been stagnant or in decline since the second quarter of last year and contracted by a shocking 1.9% in the first quarter of this year.
Economists warned there could be a double-dip or “W-shaped” recession where a brief recovery gives way to another vicious slump. Richard McGuire, a fixed income strategist at RBC Capital Markets, said: “It is hard to see a near-term recovery as anything more than W-shaped.”
Vicky Redwood, UK economist at Capital Economics, said: “It is quite possible that after a quarter or so of positive growth, the economy starts to contract again. We are not out of the woods yet.”
There are concerns that rising unemployment, falling house prices, and the continued shortage of bank lending to consumers and businesses will hold back the recovery.
Record levels of corporate and household debt will also cause a drag while the Government will have to raise taxes and cut spending to shore up the creaking public finances.
Reader views (16)
A false dawn resulting from the government's massive injudicious financial stimuli. Two years after the Wall Street Crash shares had recovered half their value but fell again and didn't regain their 1929 levels until 1950. Expect scary currency crises in the near future and much more pain. The economic cracks have just been papered over thus far. Fundamentally, you can't solve a problem caused by too much borrowing by borrowing even more - the price will have to be paid. These stimuli have simply put off the evil day for a short while.
- Richard Kennard, Welling
Lovely Jubley Rodney ,just because a few mortgages have been written on low cost property in Pekham - things are on the up and up Rodders - the sun must be out in the city -Parliament is heading for summer recess!! Wimbledon just around the corner-the economy in the UK is totally dependant on the domestic property market -it would seem !! cushties Del boy. Mayor overclaimed on his expenses -surely not sir- suits you sir 
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- Keith G Skelton, Colombo : Sri Lanka
It would be foolish to take this one piece of information and conclude that the UK is out of the woods. It is hard to believe that it will be over any time soon based on the words of an expert or the press (who are more prone to making the news than reporting it.)
The signs on the ground are still not good, and redundancies and job shedding is still on-going (another 500 jobs to go at Lloyds announced today.)
And, no, Gordon is not a do no wrong super hero. He will be history very soon by the look of things.
- Xtremely Worried, Unknown
The UK government is pumping £25Billion a month in pump priming into the UK economy. For once in his life Keith Price is right. Gordon Brown is responsible for the upkick in consumption of services. Unfortunately this is likely to be merely the debt driven last gasps before unemployment and increase cost of debt drags the UK into full blown recession.
- Billg, Slough
More bull from the same bunch of BS merchants that got us into this in the first place. they didn't see that coming any more than they can see the end coming. they are just talking out of their butts because its good for their career and bonus to be in print.
- Barry, woking, surrey, UK
No wonder Cameron wants a quick election if his doom and gloom campaigning is starting to unravel.
- David Brede, Northampton UK
PS "keeping his promise" Keith? ... I believe the current government still owes us a referendum?
- Marianne, SW France/London
maybe so, but let's not forget that the UK was one of the FIRST countries to go into recession too, so please don't imply it's recovering faster than anyone else.
- Marianne, SW France/London
Who makes this up? Where has all the debt gone?
- Dave Davies, Basingstoke
Good news for Keith Price!!!
- Al, carlisle uk
Well, that's one in the eye for those who were predicting and wishing for a 1930s style recession (and who will no doubt continue to do so until the next recession in 7 or 8 years' time).
- George, London
These doughnuts do not have a clue, v-shaped, w-shaped recoveries. Are they talking about doughnuts?!
There is no way we are out of this mess, not with oil prices where they are. The car industry is on its knees, building also, and the financial sector will take years to recover, as will property prices.
These are the fundamentals you should look at amongst other things!
- Darren, london
Ted, what are you talking about
The article says there is good news but it is too early to say if we are out of the woods yet and there are still uncertainties and problems ahead. In fact this may be a false dawn but let's keep everything crossed. How is this fantasy?
It couldn't possibly be that you have a jaundiced and party political view of the world that only wants bad news could it?
- Glennm, London
Well done Gordon Brown for keeping his promise and turning things round in economic terms so quickly
- Keith Price, Luton, England
Nonsense! Pull the other one.
- Steve King, Brentford.
After reading this piece it's clear and unambiguous; I've finally made it to Fantasy Island.
- Ted, London
