A British leading business group has raised the economic growth forecast for 2013 to 1.2 percent from 1.0 percent it made in May as the signs of economic recovery have grown strong since the beginning of the year.
The forecast upgrading by the Confederation of British Industry (CBI) on Monday is based on a better than expected second quarter and signs of a pick-up in confidence across a broad range of sectors, including services, construction and manufacturing.
For 2014, the CBI expected the economy to gather pace, forecasting 2.3 percent GDP growth up from 2.0 percent in May, as disposable income increases and business and housing investment support domestic demand.
"A return to growth in the Euro area and broader global recovery will give a positive boost to exports, but imports will also grow as the UK's domestic situation improves, so the trade contribution to growth will remain small.
The latest trade figures produced by the Office for National Statistics (ONS) which showed exports of goods reached a record high of 26.9 billion pounds (41.7 billion U.S. dollars) in June, an increase of 1.3 billion pounds over May.
Imports for the same period increased 0.7 billion pounds to 35 billion pounds (54.2 billion U.S. dollars).
They also said that the recent released forward guidance by the central bank would add to the recovery in business and consumer confidence. "
"The economy has started to gain momentum and confidence is picking up, but it's still early days, said John Cridland, CBI Director-General.
"We need to see a full-blown rebalancing of our economy, with stronger business investment and trade before we can call a sustainable recovery. We hope that will begin to emerge next year, as the Eurozone starts growing again.
He called on the government to help British businesses break into new export markets and sell great British products and services around the globe.
The group expected household spending to slowly strengthen in the second half of 2013 and through 2014, as confidence lifts and credit conditions continue to improve.
Meanwhile, business investment and exports are forecast to strengthen as the global economy picks up and the Eurozone returns to growth, confidence rises, and credit conditions continue to improve.
Business investment is forecast to grow by 7.3 percent in 2014 from a decrease of 2.8 percent in 2013.
Export growth is expected to increase from 0.7 percent in 2013 to 4.9 percent in 2014, but the net contribution of trade to GDP growth will remain muted as domestic demand boosts import growth from a drop of 0.8 percent in 2013 to an increase 4.4 percent in 2014.
The CBI forecasted that the unemployment rate will be 7.8 percent in 2013, falling to 7.6 percent in 2014.