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Economy to pass pre-recession peak
The UK downturn is finally expected to be left behind next year as the size of the economy surpasses its pre-recession peak, according to a new forecast upgrading prospects for growth.
The prediction from the British Chambers of Commerce (BCC) brings forward the likely date to the third quarter of 2014.
It would mark the first time that UK gross domestic product (GDP) has climbed back to the peak it reached in the first quarter of 2008.
While this would still mean that it has taken more than six years just to return the economy to the position it was in before it nosedived, it would abate fears of a lost decade.
The forecast comes amid a recent pattern of accelerating growth, which reached 0.8% in the third quarter of this year.
A year ago amid a much gloomier picture for the economy, the BCC predicted the pre-recession peak would not be reached until 2016. This was brought forward in August to the first quarter of 2015 but has now been revised again.
John Longworth, BCC director general, said: "It is really great that next year the UK economy is finally expected to bounce back from the deepest recession in modern times.
"British businesses have remained determined to compete and grow in the face of difficult circumstances, and the upgrading of our short-term forecast is testament to their sheer hard work, resilience and creativity."
Figures from the Office for National Statistics show that, at its lowest point, the economy fell to 7.2% below the peak. Latest data suggest that in the third quarter of this year it remained 2.5% off the 2008 level.
The BCC now expects GDP growth of 1.4% for this year (up from 1.3%) and 2.7% next year (from 2.2%), driven by household consumption, boosted by the buoyant property market.
However, it expects the rate to slow to 2.4% (down from 2.5%) by 2015 as consumption moderates amid high personal debt levels.
Mr Longworth said long-term challenges were still looming, with the need to find ways of boosting business investment and exports as household spending wanes. Small businesses were still struggling to obtain finance, he added.
"Politicians must not take their eye off the ball in the run-up to a general election, and must ensure that the economy remains front and centre at all times.
"If we make important decisions to fix the long-term structural failure in business finance, continue to deliver a major infrastructure upgrade and do more to support exports, it is possible to achieve not just a good recovery, but a truly great and sustainable economy."
BCC chief economist David Kern said: "We believe that in 2014 UK GDP will at long last move above its 2008 pre-recession level.
"But long-term trends show we can do much better, and with the right policies in place we can expect a much stronger recovery in the second half of the decade."
A Treasury spokesman said: "Britain's economic plan is working: growing the economy, creating over 1.4 million new private sector jobs and cutting the deficit by a third.
"But the job is not done, and the Government will go on taking the difficult decisions needed to support business and secure a responsible recovery for all."