The UK economy will grow by 1.4% this year, thinktank the National Institute of Economic and Social Research (NIESR) has forecast.
It said economic growth had returned following two years of stagnation, and is forecasting the sharp rise in GDP this year, followed by a 2% rise next year.
NIESR said GDP is expected to return to its previous peak in early 2015, while predicting CPI inflation will also fall to an average of 2.5% next year.
The upward revision of the forecasts has returned them to August 2012 levels and NIESR said the falls since then were due to changes in consumer spending and developments in the Euro area.
The public sector deficit should fall slowly but accelerate in the following years, it added.
Meanwhile the group predicted unemployment will fall gradually to an average of 7.4% by the middle of next year. The Bank of England has said it will not consider raising interest rates until unemployment is at 7%.
NIESR said it expected this would happen by 2016 but there was a 20% chance it could happen as early as the first quarter of 2014. Therefore it expects an interest rate rise in the second half of 2015.
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