UK is seeing the ‘right kind of growth’

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“Our forecast shows encouraging signs that business investment and net trade are starting to play their part,” said CBI boss John Cridland.

He said the recovery was not a “debt-fuelled, housing bubble-led recovery”, as some economists have feared.

However, Mr Cridland warned that political uncertainty ahead of the election could be a real “mood killer”.

“There is no doubt that business leaders are concerned about political uncertainty as we enter a lengthy election campaign,” he said.

“This could be a real mood killer when business leaders are faced with making big investment decisions in the months ahead.”

The CBI, which represents some 240,000 businesses, predicts that business investment growth will rise at its fastest rate since 2007, helped by improving confidence amongst businesses and low borrowing costs.

In addition it is predicting that export growth will strengthen as the eurozone and the broader global economy pick up.

On housing, the CBI said that much of the price increases had been in London and the South East and were not being replicated across the country.

In line with other forecasters, the business group also upgraded its growth forecast for this year to 2.6%, up from 2.4% in November and said that it saw “no prospect” of an interest rate rise until late in 2015.