The British economy will continue to expand throughout this year and growth is expected to pick up in 2014, the Confederation of British Industry said in a report on Monday.
In its latest economic forecast, the CBI projects the gross domestic product to grow 1 percent in 2013, unchanged from its previous forecast. In 2014, growth is seen at 2 percent.
However, it warned that despite the recent economic data being more promising, clear challenges remained both at home and abroad.
"The UK economy is moving from flat to growth," CBI Director-General John Cridland said. "Although recent data suggests rising business confidence, the economic climate remains tough, hampering demand here and overseas," he added.
The CBI forecasts unemployment to rise to 2.58 million in 2013 before receding slightly to 2.51million in 2014. Inflation is expected to peak at 3.1 percent in the second quarter of 2013, before starting to fall steadily for the rest of the year, though remaining above the central bank's target at around 2.5 percent throughout 2014.
Business investment growth of just 3.3 percent is forecast for this year with uncertainty in the Eurozone and the muted international outlook limiting business investment intentions. Investment is expected to pick up 6.3 percent in 2014 as global conditions improve.
British export performance is expected to remain rather anemic in 2013 with a growth of 0.4 percent. However, export growth is forecast to pick by around 5 percent next year.
Household spending is expected to remain subdued this year but a gradual improvement is expected next year with growth rising to 1.8 percent in 2014 from 1.3 percent this year.
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