Over the past few days, the City has echoed to the sound of frantic scribbling as economists have scrambled to update their forecasts on everything from growth to gold. On the whole, the updates have been upbeat.

The recent run of more encouraging statistics continued this week with news of an increase in industrial production in April, more optimistic signs from the housing market and slightly less gloomy noises from employers on job cuts.

On the back of the industrial output figures, the National Institute for Economic and Social Research declared that the economy probably started growing again in April and May. Many, if not most, City economists now agree that output has bottomed out and will grow in the third quarter.

If true, this would mean that the forecasts Alistair Darling made in the Budget of a return to growth at the end of the year - forecasts that were widely derided at the time - were actually too cautious. Whether the recovery will last is another question.

Most dramatic have been the revised predictions for house prices. The dismal crowd at Capital Economics have slashed their forecast for this year from a 20 per cent fall to just 10 per cent, athough they still think there will be a peak-to-trough drop of 40 per cent - it will just take longer to get there.

But not all the revised forecasts have been good news. The steady rise in the oil price has prompted a sharp increase in predictions for the crude price. With oil now above $70 a barrel, Goldman Sachs has raised its forecast for the end of the year from $65 to $85 and says prices could touch $100 by the end of next year.

The Chancellor this week singled out rising oil prices, along with the failure of other European countries to clean up their banks, as serious threats to the recovery. The oil price had “the potential to be a huge problem,” he said.

Economists argue about how much impact a big rise in the oil price has on the British economy these days, although they agree that it is much less than it used to be. It is also less important than for the US.

The doubling of the price in the past four months has put paid to hopes that British households will see further cuts in their utilities bills. If it increases much further, there will be fears that those bills could start rising again, though it takes some time for a rise in the oil price to feed through into long-term gas prices. The strengthening of sterling has also taken some of the sting out of the rise in the oil price in dollar terms.

Of course, a continued rise in the oil price will be unhelpful, but it is hard to see it as one of the biggest threats to recovery. It is only to be expected perhaps that the Chancellor would focus on the oil price and the state of European banks - for which he bears no possible blame - rather than factors closer to home. As the Bank of England's Paul Fisher said yesterday, the biggest concern is the state of Britain's banks and their ability to step up lending. Here too, though, the recent evidence has been mildly encouraging. Surveys by the Bank and the CBI suggest that credit conditions have at least stabilised and some small company advisers tell me they have improved in the past couple of months.

If this continues, the City scribblers might have to get their pencils out again.

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