The UK’s economic growth forecast for this year has been upgraded by the Confederation of British Industry (CBI), the business lobby group.
While political instability and financial uncertainty in the Eurozone pose a risk to expansion, the CBI still predicts that business investment will see a 5.8 per cent increase and the wider UK economy is expected to grow by 2.7 per cent in 2015.
The CBI’s former forecast – released in November – expected UK economic growth for this year to be 0.2 per cent lower (at 2.5 per cent).
Low inflation, which has seen a rise in household spending and a pay increase for the average family, and improvements in general employment conditions, have been two major factors responsible for the revised estimate.
Gross domestic product (GDP), which includes all the services and goods produced in a year, grew by 2.6 per cent last year at a rate faster than other economies in Europe.
Oil prices are expected to remain below $65 per barrel this year.
However, while North Sea oil companies have made cutbacks because of the recent trend, other businesses have experienced a reduction in operating costs as a result of the low oil price.
The CBI also expects consumer price inflation to stay below one per cent this year, which indicates that the economic conditions will continue to remain favourable for consumers.