NIESR predicts UK growth of 2.5pc in 2015

In its latest National Institute Economic Review the NIESR warned that the greatest risk to the recovery is productivity growth, adding that if this fails to recover the impact on living standards and public finances will be devastating.

The research institute expects the Bank of England to start raising base rates between February and June 2015.

It foresees CPI inflation to stay in line with government targets, while it anticipates business investment to grow by 9.3% this year and 8.2% in 2015 before easing to between 2% and 3% from 2016 to 2017.

The NIESR expects public sector borrowing to remain unchanged next year at around £97bn.

It also reckons that unemployment – which dropped below 6% in the second half of 2014 – will stabilise at around 5.5% from 2018 onwards.