The UK's service sector grew at its fastest rate for almost ten years in December 2006, research suggests.

According to a study by the Chartered Institute of Purchasing and Supply, in partnership with the Royal Bank of Scotland (RBS), growth was reflected by an increase in overall order levels, particularly in respect of business services and hotels.

The index of business activity rose to 60.6, the highest level recorded since 1997.

"With the service sector booming and the buoyancy of the housing market continuing to present an upside risk to consumption, these data point to the monetary policy committee needing to feel little concern [that] domestic demand would suffering unduly [from additional tightening]," said Richard McGuire at RBS Capital Markets.

In related news, economists have confirmed that they are more confident about the future prospects of the UK economy than at any point over the last two years, according to the Financial Times.

However, there is some concern as to the implications of a downturn in the US and its effects upon the global economy.