The size of the UK economy will surpass its pre-recession peak by the summer, according to an upgraded forecast from the British Chambers of Commerce.
The business lobby group believes the UK will grow by 2.8% this year and that the second quarter will see gross domestic product rise to the level seen in the first quarter of 2008.
A year ago, the BCC predicted the pre-recession peak would not be reached until 2016.
The group’s director general, John Longworth, said Britain’s economic recovery is gaining momentum.
“Businesses across the UK are expanding and creating jobs, and our increasingly sunny predictions for growth are a testament to their drive and ambition,” he said.
The BCC expects the first increase in interest rates will happen in the autumn next year – one quarter earlier than previously envisaged, before rising to 1.5% in the second half of 2016. GDP will be 2.5% next year and in 2016.
But Mr Longworth warned business investment is likely to remain below pre-crisis levels for some time to come.
“Major issues remain, such as the unacceptably high level of youth unemployment,” he added.
“We urge the Chancellor to use this month’s Budget wisely by incentivising businesses to hire young people so that the next generation of workers are not left behind.
“We just hope that as the general election gets closer, politicians are not tempted to abandon a drive for long-term economic security in favour of short-term vote winners.
“No government over the next decade can afford to get distracted – and our leaders must do everything in their power to ensure the economy goes from being merely good, to being truly great.”
