Could the UK be pulling back from recession?

That was the question in the City today and, indeed, at the Bank of England, where the Monetary Policy Committee (MPC) is meeting today and tomorrow to discuss how much more money it may need to pump into the economy through its quantitative easing programme.

The news which sparked the debate came from a shock surge in confidence in the services sector and an equally unexpected rise in manufacturing which together combined to send the pound rising 0.71 cents to $1.7011, touching a 2009 high against the dollar.

The Chartered Institute of Purchasing and Supply (CIPS) revealed that its index of business activity in the service industry - which makes up three quarters of the UK economy - jumped in July to a 17-month high of 53.2. Figures above 50 represent growth in activity.

"After hitting an all-time low in November, the services sector is rebounding at an unprecedented rate," said David Noble, CIPS chief executive.

The Office for National Statistics reported that industrial output rose 0.5% in June, its fastest pace since October 2007. The figures were boosted by production firing up again at car plants around the country.

On top of this the latest Halifax house price index was unexpectedly bullish, rising 1.1% last month.