The UK economy will this summer surpass the level it was at during its pre-recession peak back in 2008, according to a leading business lobby organisation.
The British Chambers of Commerce (BCC) forecasted that GDP will overtake the value it was at back at the beginning of 2008 during the second quarter of this year, citing that the economic recovery is beginning to ëgather momentumí.
They also upgraded their annual growth estimates for 2014 to 2.8%, up from its previous forecast of 2.7%, highlighting the current expansion in business levels and performance as the driving factor behind their revisions.
“Our economic recovery is gaining momentum,” said BCC director general John Longworth.
“Businesses across the UK are expanding and creating jobs, and our increasingly sunny predictions for growth are a testament to their drive and ambition.”
Previously, the BCC had estimated that the UKís GDP levels would match their pre-recession peak levels by the final quarter of this year, but the organisation identified that when undertaking an upward revision of previous GDP information released by the Office for National Statistics, that they had been led to conclude that this will happen two quarters earlier under current trajectory.
The business groups forecasts on the state of the economy are contrary to recent remarks made by the Bank of England, who have described the current nature of Britainís growth as ëunsustainableí and based around consumer spending rather than on more important factors such as labour productivity and business performance.
The result has been that the past link between economic improvements and real wage rises has yet to be realised, with capital wealth again emerging as the governing financial doctrine in the UK, due to consumers capitalising on the low cost of loans at present.
The BCC did concede that consumer spending has, and will continue to, play a primary role in the countryís economic recovery, but highlighted that a pick-up in business activity has also played a substantial contributory role in the UKís recent upturn.
They also forecasted that the Bank of England will begin to raise interest rates from their historic low of 0.5% at the end of 2015, but estimated that they would only steadily creep up to 0.75% when the first increase takes place.
They outlined that they then expected rates to increase to 1.5% during the second half of 2016, clearly suggesting that they believe the Bank will proceed with extreme caution in the future when contemplating interest rate rises.
Youth problems remain
Despite their generally optimistic forecast on the current and future state of the countryís economy, the BCC warned that it is not ëtime to break out the champagne glasses just yetí, arguing that a huge level of work will need to be undertaken in order to address the unresolved issue of youth unemployment.
Mr Longworth argued: “Major issues remain, such as the unacceptably high level of youth unemployment.
“We urge the chancellor to use this month’s Budget wisely by incentivising businesses to hire young people so that the next generation of workers are not left behind.”
Mr Longworth also urged the government to implement policy that improves the levels of finance available to small businesses, and called for investors to act now and place their money into businesses, in order for the country to maximise its levels of economic growth.
The BBCís estimations were mirrored by separate forecasts made by accounting giants BDO, who cited that a recent upturn in the UKís manufacturing sector, coupled with renewed business confidence has led to them upgrade their own growth forecasts for this year.
Budget boost for Osborne
The BDO also identified that they expect wages to begin to rise at a rate faster than inflation by the second or third quarter this year, echoing the sentiments of the BBC.
The positive natures of their forecasts were also displayed by the Federation of Small Businesses (FSB), who identified that the levels of finance available to small companies are beginning to rise.
They also identified that one in seven of the businesses listed in its organisation expect to create employment opportunities in the next 3 months, which will be welcome news to aspiring young workers, whoís future is directly attached to the trajectory of small businesses in the country.
The collective optimism displayed by 3 of the UKís prominent organisations will be a huge boost to Chancellor George Osborne ahead of his annual budget speech set to be made on March 19.
It is widely believed that Mr Osborne will upgrade the current growth estimations given by the Office for Budget Responsibility from 2.4%, but will address issues such as low labour productivity levels and real wages as well.