The Confederation of British Industry (CBI) has claimed that increases in productivity, household spending, and business investment means UK GDP will see stronger growth than previously anticipated.
This has led the business lobby group to upgrade its forecast to 2.6% for the year.
The increase from 2.4% in June is joined by an updated expectation for next year, with the organisation now predicting growth of 2.8% in 2016.
Rain Newton-Smith, the CBI’s director of economics, said: “Strong domestic demand and upbeat official data since our last forecast has boosted our outlook for 2015.”
“We expect this strength to continue into next year,” he added.
The forecast for the UK economy is in line with other private sector predictions, although still less than the 2.8% figure for this year predicted by the Bank of England.
On the other hand, it is higher than the 2.4% announced by the Office for Budget Responsibility in the recent budget.
According to the CBI business investment is expected to “remain healthy”, with surveys predicting significant capital spending plans from firms already in place for the months ahead.
The group's predictions for total business spending for 2015 see a rise of 6.2%, with manufacturing fixed investment benefiting from a 12.6% growth level.
The CBI's rosy outlook is based around domestic demand rather than other economies.
Outgoing Director General John Cridland said: “The strong pound is hampering our competitiveness abroad and growth in the Eurozone, our biggest trading partner, will remain subdued for the foreseeable future, particularly given renewed uncertainty.”
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