THE UK economy will exceed its pre-recession peak by the summer, according to upgraded forecasts from a leading business lobby group today.
The British Chambers of Commerce (BCC) now believes the UK will grow by 2.8 per cent this year and that the second quarter will see gross domestic product (GDP) climb back to the level seen in the first quarter of 2008.
A year ago amid a much gloomier picture for the economy, the BCC predicted the pre-recession peak would not be reached until 2016, although a number of revisions brought this forward to the third quarter of 2014 in December.
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While it has taken more than six years to return the economy to the position it was in before it nosedived, it abates earlier fears of a lost decade.
BCC director general John Longworth said: "Our 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.
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 per cent in the second half of 2016. GDP will be 2.5 per cent next year and in 2016.
However, Mr Longworth said it was not time to break out the champagne, particularly as business investment is likely to remain below pre-crisis levels for some time to come.
He added: "Major issues remain, such as the unacceptably high level of youth unemployment. We urge the Chancellor to use this months 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."