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UK economic growth ‘to reach 2.5% this year’

The National Institute of Economic and Social Research (NIESR) has announced that it expects the UK economy to grow by 2.5% in 2014, and then by 2.1% in 2015.

The research institute said the UK’s economic recovery was now ‘entrenched’. The announcement follows similarly promising growth forecasts from organisations such as the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD).

The recent rise in house prices and falling unemployment levels have fuelled the economic recovery by encouraging consumer spending.

In the three months to November, unemployment fell to 7.1%, just 0.1% above the level at which the Bank of England said it would consider raising currently low interest rates. The NIESR has also predicted that unemployment levels will fall to below 7% by the end of 2014.

However, with price rises outstripping wage growth and some persistently low levels of business investment, many experts suggest that the UK economy has not yet been completely repaired.