(Bloomberg) — The UK economy kept on course to exceed Chancellor of the Exchequer Gordon Brown’s growth estimate for 2006 in the third quarter, driven by increased company and government spending.Gross domestic product rose 0.7 percent, matching the rate in the previous three quarters, the Office for National Statistics in London said. The same pace in the fourth quarter would mean 2006 growth of 2.6 percent, it said, which would exceed the government’s top forecast of 2.5 percent. Brown may now revise up his forecast for Europe’s second- biggest economy at the pre-budget report next month, a year after slowing growth forced him to halve his estimate. That could strengthen his chances of replacing Prime Minster Tony Blair and winning the next election.

“If the economy is doing even better than forecast, Brown won’t shy away from saying it,” said Andrew Cooper, co-founder of Populus Ltd., a polling organisation. “If he can reinforce his perception as a chancellor at his final pre-budget report, that will help his image in the public mind.”

Investors added to bets that interest rates may rise again next year after the report. The implied rate on the futures contract maturing in March rose one basis point to 5.33 percent on Saturday in London. The contract settles to the three-month London inter-bank offered rate for the pound, which averaged about 15 basis points more than the central bank’s benchmark rate for the past decade.

The UK economy has grown without interruption for 57 quarters and Prime Minister Tony Blair and Brown have presided over 38 of them, avoiding contractions in the US, Germany, France and Italy.

The UK will grow 2.7 percent this year, the International Monetary Fund predicted on September 14. That compares with its forecast of 3.4 percent for the US, 2.4 percent for the euro area and 2.7 percent for Japan.

Brown predicts faster growth will allow him to cut the deficit to $36 billion ($70 billion), or 2.8 percent of gross domestic product, in the year to March 2007, from 37.5 billion pounds the year before. The deficit since March has widened to $22.9 billion.

“The outturn in growth has been stronger than the Treasury expected and that should boost tax receipts,” said Dominic White, an economist at ABN Amro NV in London who formerly worked at the Treasury. “They’re probably going to be in a slightly better position than they thought.”

The fastest pace of investment in a year underpinned economic growth in the quarter ended September 30, the government said on Saturday.