The UK is now on a “slow and steady” recovery path, business leaders have predicted, as they raise their growth forecasts for the next few years.
The Confederation of British Industry expects GDP growth in 2014 and 2015 to gather pace as business investment and net trade provide support to the economy.
Although the recovery “won’t be spectacular” it appears to be “better-rooted” after a recent boost in the manufacturing and construction industries.
The group has forecast GDP growth of 1.4% in 2013, up from 1.2% in its August forecast, after better than expected GDP growth in the third quarter.
In 2014 and 2015 the CBI expects the recovery to gather pace, forecasting 2.4% GDP growth in 2014, up from 2.3% in its earlier predictions, rising to 2.6% growth in 2015.
John Cridland, the director-general of the CBI, said: “The UK is now set fair for growth with confidence returning to Britain’s entrepreneurs.
“The recovery that started in the service sector has fanned out to manufacturing and construction, and is shaping up to be more broad-based.
“The recovery won’t be spectacular, just slow and steady, but appears more solid and better-rooted.
“We’re also expecting business investment to pick up over the next two years and beyond, and net trade will begin to make a stronger contribution to growth.”
Household spending is expected to slowly strengthen through as confidence lifts and credit conditions continue to improve.
Stephen Gifford, CBI director of economics, said: “Consumer spending will rise, underpinned by increased confidence, improved credit conditions and a gradual pick-up in real incomes.
“But risks remain, despite the relatively stable global environment of the past year, with financial markets moving to a new regulatory environment, the Eurozone continuing to evolve, emerging markets facing structural change and the challenge of unwinding unconventional monetary policies.”