The British Chambers of Commerce (BCC) has revised its GDP forecast for 2018 from 1.1 per cent to 1.4 per cent.
The stronger figures have been driven by increases in consumer spending, the BCC says.
This has also affected predictions for 2019, where the growth forecast has risen by 0.2 per cent to 1.5 per cent. In 2020, the forecast is currently set at 1.6 per cent.
In addition to this, average earnings, consumer spending and business investment growth figures have all been upgraded. The 2018 UK GDP growth forecast for average earnings is now at 2.7 per cent, consumer spending at 1.2 per cent and business investment growth at 1.1 per cent.
However, although the upgrades have been positive, the BCC has raised concerns over GDP growth going forward – which currently sits below the historical average throughout the forecast period.
Dr Adam Marshall from the BCC, said: “While many individual businesses are doing well, the inescapable conclusion from our forecast is that the UK economy as a whole should be performing better than it is, given robust and sustained global growth.
“We have serious concerns about the potential for further growth here at home when the performance of key trading partners slows. Sustained skills and labour shortages are also a real issue, with businesses reporting significant difficulties recruiting and retaining the people they need.”
In line with its concerns, the BCC has also predicted that UK public sector borrowing will be £13.4 billion higher over the next three years than previously forecast.