Britain's recession-scarred economy clocked up growth of 0.7% in the second quarter of the year, faster than previously thought, stoking hopes that a solid recovery is finally taking hold.

The Office for National Statistics upgraded its initial 0.6% estimate, putting the pace of growth at 0.7%, its strongest since the third quarter of last year when the economy received a temporary fillip from the Olympics.

The bounceback is more broad-based than first thought, according to the breakdown of the data, helping to assuage fears that Britain is in an unsustainable "Alice in Wongaland" recovery, too dependent on consumer spending.

Business investment was up 0.9%, the ONS said, while household spending expanded by 0.4%. Exports rose at 3.6%, the fastest pace since late 2011. Ross Walker, UK economist at RBS, who upgraded the bank's GDP growth forecasts after the news, to 1.3% this year and 2% in 2014, said: "The recovery is taking on a more normal shape."

Chris Williamson, chief economist at data provider Markit, said: "Importantly, the upturn was not simply fuelled by surging spending by households. Instead, exports and business investment were key drivers of the expansion, pointing to a rebalancing of the economy away from domestic consumption."

A few months ago, Britain appeared to be flirting with a renewed recession, after a deep fall in output in the final quarter of 2012. The improving economic climate in the eurozone, boosting demand for British exports in our main market, and growing consumer confidence as the housing market thaws, have helped to create a more optimistic mood.

The Treasury, which is hoping a full-blown recovery is under way after almost two years of persistent economic weakness, seized on the widespread nature of the expansion signalled in the figures. A spokeswoman said: "It's particularly encouraging that growth in exports and investment contributed well over half of the second quarter growth rate. There is still a long way to go, but the economy is on the right track."

David Kern, of the British Chambers of Commerce, said: "Business investment is still too weak in spite of the modest rise, but the figures support our view that Britain's trading position is improving. Although the rebalancing towards net exports is taking some time, we have seen a significant narrowing of the trade deficit in the first half of this year."

Chris Leslie, shadow financial secretary to the Treasury, said: "These figures confirm that after three wasted years of flatlining we finally have some welcome but long overdue growth. But for all George Osborne's complacent claims that the economy is now fixed, for ordinary people things are getting harder."

As it updated its data with more detailed information, the ONS confirmed that all four main sectors of the economy – agriculture, production, construction and services – had expanded for the first time since the third quarter of 2010, just after the coalition came to power. In services, which makes up more than 75% of the economy, the strongest growth was in distribution, hotels and restaurants, where output was up 1.7%.

Construction saw a healthy 1.4% rise, stronger than the initial estimate of 0.9%, echoing growing confidence from builders about the outlook; while manufacturing output – key to the government's hopes of rebalancing the economy – rose 0.7% over the quarter, compared with the first estimate of 0.4%.

Looked at over the longer term, construction output is nevertheless 0.5% below the same period last year; and manufacturing production is about 10% lower than its peak before the financial crisis.

Relatively strong retail sales, employment data and business surveys have all raised hopes recently that the recovery will continue in the second half of 2013, as confidence improves. But some analysts still caution that, with fresh austerity measures due to bite over the next year, the nascent recovery looks too reliant on Britain's shoppers.

Melanie Bowler, an economist at Moody's, said that while she expected GDP to continue growing for the rest of the year, question marks remained about the longer-term sustainability of the recovery.

"The risks are weighted to the downside for the remainder of 2013 and indeed for the next couple of years. In particular, dependence on private consumption as the key contributor to economic growth is a concern for the UK, where fiscal austerity is likely to hold down domestic activity for some time."

Danny Gabay, of City consultancy Fathom, said the coalition's recent measures to kick-start the housing market could tip the balance towards consumer spending. "We expect household consumption to strengthen through the second half of this year, as a number of government schemes designed to promote lending, even to the riskiest of prospects, start to bear fruit."

Workers' pay rose by 2.4% in the second quarter, the fastest pace since mid-2000 – but the ONS stressed that this partly resulted from unusually high April bonus payments after some were deferred payouts to benefit from Osborne's 5p cut in the top rate of tax.