The UK economy is set to grow by 2.5% this year and 2.1% in 2015, according to a forecast by the National Institute of Social and Economic Research (NIESR).
This follows a 1.9% expansion in 2013 – the highest rate of growth for six years – which was driven primarily by the services and manufacturing sectors.
A statement from NIESR said:
“Above trend growth returned in 2013, while the remarkable performance of the labour market persists. We expect consumer spending to be the key driver of recovery in 2014 and 2015, supported by continued buoyancy in the housing market.”
More jobs should be created as a result of this growth, with unemployment set to fall below 7% at some point in the first half of 2014.
The think-tank also stated that national output would would return to its pre-recession level by the third quarter, but that wages might take as long as a decade to recover.
Simon Kirby, principal research fellow for NIESR, said:
“In the long run, rising standards of living can only occur through improved productivity.
“If we do not see this materialise we may well continue to see this downward trend in real consumer wages and it does put at risk somewhat the recovery we are expecting to happen over the next few years.”