A survey has shown that Britain's dominant services sector expanded at the fastest pace in 10 months in January as firms grew much more optimistic.
The report was the latest in a series of data which have raised hopes that the UK economy may avoid recession.
The Markit/CIPS Purchasing Managers' Index (PMI) for services rose to 56 from 54 in December, confounding forecasts for a dip to 53.5 and climbing higher above the 50 mark which separates growth from contraction.
The surprise improvement in the sector follows PMI releases showing that manufacturing unexpectedly returned to growth last month, while construction firms became more upbeat despite a slower expansion in activity.
"All points to a resounding revival of UK economic growth in January," said Chris Williamson, chief economist at survey compiler Markit. "A slide back into recession is now looking increasingly unlikely," he added.
Britain's economy shrank in the final quarter of 2011, as manufacturers and construction companies scaled back production. Another consecutive quarter of contraction would tip it into recession.
Markit's forecast contrasts sharply with that from the National Institute of Economic and Social Research (NIESR) earlier today. It forecast a 0.1% drop in GDP for 2012 as a whole.
Activity in the service sector increased above trend on the back of the strongest rise in new business since July, Markit said, noting evidence of improved confidence among clients.
Hotels, catering and restaurants, and personal services recorded the largest gains in activity.
Business expectations made the biggest monthly jump since records began in 1996 - rising from 63.5 to 70.3 - to stand at the highest level since May. Half of respondents forecast better activity in a year's time and only 10% signalled a deterioration.
Moreover, employment in the sector expanded at the fastest rate in almost four years, fuelled by an inflow of new business and expectations of further growth. Input price inflation weakened in January to the lowest in well over a year, pressured by lower energy bills, while average prices charged by service companies were little changed.
Ease up on austerity, Britain urged
The NIESR earlier warned that Britain's economy will fall into recession in the first half of the year, saying the country's government needs to ease up on its tough package of spending cuts.
The UK economy will shrink 0.1% in 2012, the National Institute of Economic and Social Research (NIESR) said, as cash-strapped households tighten their purse-strings and nervous businesses hold back on investment.
Chancellor George Osborne's austerity measures are contributing to low demand in the UK, which in turn is damaging the broader economy, NIESR said, so a temporary softening of his fiscal stance would give the country a much-needed boost.
In addition, the institute said an increase in government investment would not derail the Chancellor's long-term goals, nor prevent him hitting his fiscal targets.
Elsewhere, NIESR said the UK economy would rebound in 2013 with 2.3% growth - but only if a successful resolution to the ongoing euro zone debt crisis were found.
Meanwhile, the group forecast global growth of 3.5% for 2012, led by Asian powerhouses China and India, while the US should see 2% growth.
The UK is already close to another recession - two consecutive quarters of economic decline - after official figures revealed that the economy shrank by 0.2% in the final three months of 2011.
In its UK and World Economy Forecast, NIESR said: "We forecast a return to technical recession in the first half of this year, as households continue to retrench, credit conditions remain tight, and businesses are reluctant to invest given uncertainty about both domestic and foreign demand."
The forecaster said economic conditions will not improve in the short term, with flat output this year, as both the private and public sectors clear off debts.
Unemployment will rise to about 9% this year, from 8.4% in the three months to November and will remain above 7% in 2014. A jobless figure at this elevated level for a long period is likely to do "permanent damage" to the supply side of the economy, with large long-run economic costs, NIESR warned.
The think-tank added: "The UK economy currently suffers from deficient demand; the current stance of fiscal policy is contributing to this deficiency. A temporary easing of fiscal policy in the near term would boost the economy."
