The UK is to enjoy “decent quarterly GDP growth” the CBI has predicted as it upgrades its forecasts for this year and next.
The business lobby group now expects growth of 2.6% this year and 2.8% next year, up from its June forecast of 2.4% and 2.5% respectively.
Increased household spending and “robust” investment growth will drive the improved growth, the CBI believes.
The CBI now expects interest rates to rise in the first quarter of next year.
In June, it had expected rates to begin rising from their historic low of 0.5% from the start of April next year.
But it now says the improved growth picture alongside “more hawkish” comments from the Bank of England’s rate-setting Monetary Policy Committee had prompted it to bring its prediction forward.
“We now expect interest rates to rise to 0.75% in the first quarter of 2016, and then rise at a slow pace thereafter,” the CBI said.