UK growth will slow down sharply next year amid political uncertainty at home and abroad, a leading business group has predicted.

The EY ITEM Club's Autumn forecast said gross domestic product (GDP) would grow by 3.1 per cent this year but only 2.4 per cent in 2015, much lower than expectations by the Bank of England, the CBI or International Monetary Fund (IMF).

It comes just days after the Bank's chief economist Andy Haldane signalled interest rates were unlikely to rise until next summer due to the gloomier economic outlook.

The report also follows a turbulent week on world markets, which has seen the FTSE 100 Index fall to levels not seen since June last year as growing worries hit the health of the global economy.

According to the study, political uncertainty both at home and abroad now tops the list of business worries and is set to dampen investment and slow the pace of UK growth.

Peter Spencer, chief economic adviser to the EY ITEM Club, said: "The forecast for GDP growth is still relatively good. What has changed is the global risks surrounding the forecast and the headwinds facing investment by firms.

"Looming political uncertainty risks denting corporate confidence, the question now is how will these risks play out? I expect caution to become the order of the day."

The report's forecasts for growth are lower than expectations from the Bank of England, which has pencilled in 3.5 per cent for this year and three per cent for next, as well as the IMF (3.2 per cent and 2.7 per cent) and the CBI (three per cent and 2.7 per cent).