Analysts Believe A Strong Housing Market Will Drive The Economy
The British Chambers of Commerce (BCC) has predicted the UK economy will grow rapidly in 2014.
Analysts at the organisation upgraded their gross domestic product (GDP) forecast for 2013 from 1.3 per cent to 1.4, while 2014 saw larger gains - rising from 2.2 per cent to 2.7.
This will take the UK beyond its pre-recession peak in the first quarter of 2008, before the US housing market bubble burst and debt levels reached crisis point in the EU.
While there have been a number of concerns voiced over the stability of the UK's mortgage market because of the government's flagship Help to Buy scheme, which some critics say is inflating a new property bubble, the BCC says this is improving consumer demand.
However, the trade organisation warned against undue enthusiasm and downgraded its 2015 forecast from 2.5 per cent to 2.4 - reflecting longer term concerns about export markets' potential to buy British products.
David Kern, BCC chief economist, said: "We expect GDP growth to remain strong in the short-term, as the housing market continues to boost household consumption.
"But while it was necessary to rely on the consumer and on housing in the early part of the recovery, it must now become more balanced, particularly towards exports, as household consumption will slow.
"While we forecast a degree of rebalancing, net exports are not making enough progress."
Unemployment is also predicted to improve and analysts think joblessness will reduce below seven per cent by the third quarter of 2015 - a landmark that would see the Bank of England's Monetary Policy Committee consider raising its base rate of interest.
Economic progress was the subject of a heated debate in Prime Minister's Questions yesterday.
Ed Miliband argued the coalition is not doing enough to improve living conditions among the nation's lowest earners, while David Cameron stated ongoing reductions in the level of unemployment will help to address this issue in the medium to long-term.
These figures are a very positive sign and are another indication to small businesses of their need to ensure they are fully primed for all of the potential opportunities which come their way over the next 12 months or so.
"With the changing climate, there is likely to an increasing number of possibilities arising for smaller businesses, which are widely regarding by economists, commentators and the government itself as the lifeblood of the economy and pivotal to further improvements.
"Growing businesses need to have a strategy in place outlining their ambitions as well as how they intend to achieve them. Central to this will be consideration of the help and advice they will need, with access to legal expertise being a particularly vital part of working towards future success."
Fergal Dowling - Partner