Supermarket price wars will limit the strain on household budgets this year, the Chancellor said on Thursday, as official figures cemented the UK's position as the fastest growing major advanced economy in 2016.

Philip Hammond said the "incredible market share war" between supermarkets over the past few years would help to curb shop price rises and support consumer confidence, as he signalled that growth in 2017 could outpace official forecasts.

It came as data published by the Office for National Statistics showed the UK economy grew by 0.6pc in the final three months of 2016, matching the expansion in the previous quarter.

This is faster than the 0.5pc growth predicted by economists and compares with the Treasury's dire predictions ahead of the EU referendum that a vote to leave the bloc would trigger a year-long recession.

Thursday's figures mean the economy expanded by 2pc over the year.

While Britain is the first G7 nation to report fourth-quarter growth figures, International Monetary Fund estimates suggest that growth in Germany and the US, which are expected to have expanded by 1.7pc and 1.6pc respectively last year, will not outpace the UK.

Mr Hammond said he believed that the current subdued levels of business investment would "come back and mak[e] a significant contribution" to growth as the country's future trading relationship with the EU became clearer.

David Fuller's view

This is significantly better than Project Fear groupthink led us to believe, and Sterling’s devaluation has helped the economy to grow.  Nevertheless, we are still in the EU, albeit on the way out.  The Trump / May Special Relationship free-trade deal will be a big boost for the UK economy, cushioning any temporary downside after Brexit becomes a reality.  

(See also: Trump Greets U.K.’s May as World Leaders Look For Cues, from Bloomberg)