The economy is recovering across a broad front Chancellor Norman Lamont

Prime Minister John Major called on industry to make the most of the "unparalleled opportunities" offered by the combination of low inflation and interest rates, and a competitive exchange rate.

The Chancellor, Norman Lamont, was also upbeat, saying the figures were "the best evidence so far that the economy is recovering across a broad front."

In a BBC interview, Mr Lamont said Britain was starting to see the reward of policies that the government had been pursuing during the past few years.

The Institute of Directors, though, disagreed with the Chancellor on the reasons for the upturn. Their latest survey said improved performance was due to Britain's departure from the European exchange-rate mechanism (ERM), a policy decision forced on the government.

Black Wednesday

The pound was driven out of the ERM last September by frantic currency speculation, on what became known as Black Wednesday.

In a catastrophic day for the government's policy on Europe and the economy, Mr Lamont was forced to spend billions in an attempt to prop up the pound, which failed as it dropped below its minimum level in the ERM.

He had no choice but to devalue and pull out of the ERM.

The Shadow Chancellor, Gordon Brown, greeted the figures cautiously, saying he hoped the recession was over, but warning that skills shortages and an investment gap with the UK's competitors could stymie future growth.

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