Growth in the UK economy will outpace any other G7 economy in 2014, according to a report from the EY Item Club.
The report also hinted that low wage increases will stave off any potential interest rate rises until at least 2015.
Strong business investment will drive growth in UK gross domestic product by 3.1% this year – up from the 2.9% increase that was previously estimated.
Strong performance against the G7
A rise in business investment of 12.5% is behind the increase, while the economy compares favourably with both Canada and Germany – where GDP growth of 2% and 1.8% is predicted respectively.
It also places the UK ahead of the economies of Japan, the US, Italy and France as the economy is set to by-pass its pre-financial crisis peaks.
“After several false starts, this time [the recovery] could be different,” said EY’s chief economist Mark Gregory.
The first three months of 2014 saw the UK GDP rise by 0.8% according to official figures – marking the fifth consecutive quarter where growth was recorded.
This is the longest positive run since before the financial crisis and suggests that the recovery is starting to gain some momentum.
Potential rate rises
The Item Club also predicts that interest rates will not rise in 2014 from their current record low of 0.5%, as a result of wages not rising as fast as inflation.
Wages are rising at a rate of 0.7% excluding bonuses, according to the latest figures, some way below the 1.9% rate of inflation that was recorded in June.
“The markets are jumping the gun in thinking that rates will rise this year,” said Peter Spencer, chief economic adviser to the Item Club.
“Low inflation, the strong pound and ongoing risks from the eurozone all suggest caution in raising rates.”
Shifting the market away from consumption and more towards business investment is also important to aiding the recovery.
Keeping a watchful eye on finances
However, given the low increases in wages, managing available finances is extremely important to ensuring that all necessities are paid for.
Financial management is extremely important, so keeping spending in check with a prepaid card is a great way of ensuring that you don’t spend more than you would like.
A prepaid card limits spending to the amount on the card at any given moment and is not directly linked to a bank account, making funds safer as a result.
The cards can easily be topped up or replaced if required while accounts can be checked regularly online if needed.