It is forecasting growth of 2.8% for 2015, although this is a slight downward revision from an earlier forecast of 2.9%, due to weak GDP growth in the fourth quarter of 2014.

UK CPI inflation has fallen to zero in recent months and is expected to average 0.1% this year, making it unlikely interest rates will rise from 0.5% this year. Low inflation combined with an improvement in employment numbers is lifting consumer confidence, the report said.

The EY Item Club identified headwinds for the economy including a weak government and an EU referendum, but the organisation said the UK is prepared for further problems in Greece. 

Regarding the general election, the Item Club said the benefits of commodity and export markets will outweigh any political uncertainty and that politics has had only a “limited impact” on markets so far.

Growth in 2016 is expected to be 3%, up from previous estimates of 2.9%.

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