Forecasts from the CBI suggest Britain’s economy is back on the path to growth, with a 2% rise in gross domestic product anticipated next year.
The business group said its latest economic study showed a “more promising” picture but still warned of “clear challenges” to come at home and abroad.
It expects the country’s output to continue to grow this year, and stuck by an earlier prediction that UK plc would finish 2013 with a 1% overall lift in its total output after first-quarter figures were in line with the CBI’s expectations.
Director-general John Cridland said the UK economy was “moving from flat to growth” despite continuing pressure on customer confidence and spending.
He called for the UK Government to deliver on its promises over boosting funding, supporting export activity and cutting bureaucracy.
“Although recent data suggests rising business confidence, the economic climate remains tough, hampering demand here and overseas,” he said.
“Meanwhile, consumers remain under pressure as inflation continues to outstrip wage growth. Now the Government needs to pick up the baton and deliver on promises to get finance to firms, cut red tape and help drive up exports.”
The CBI is forecasting growth of 0.3% in the second quarter and 0.4% in both the third and fourth quarters of this year.
It expects quarterly growth of between 0.5% and 0.6% per session next year, with an annual increase in the value of all the UK’s products and services of 2%.
The group’s models suggest a rise in unemployment to 2.58 million later this year, before it begins to decline again in the following 12 months.
Inflation is expected to peak in the second quarter of this year before falling steadily, though the CBI says it will likely remain above the Bank of England’s 2% target next year.
CBI director of economics Stephen Gifford said the survey suggested the economy’s momentum would “carry over”.
“We continue to expect UK economic growth to strengthen and become more broad-based over this year and next,” he said. “Global uncertainty has receded somewhat, setting the stage for a gradual improvement in trading conditions.
“However, while household incomes are expected to remain under pressure, improving credit conditions and confidence should maintain the momentum in the consumer recovery.”
Improving confidence, lower inflation and improving credit conditions would all support gradual improvement in household consumption, the CBI added, though the continuing uncertainty in the eurozone would limit business investment and have a negative effect on export prospects.