By Jonathan Davies

The Confederation of British Industries (CBI) has upgraded its growth forecast for the UK economy in 2015.

The business lobby group now expects the economy to grow by 2.7% this year, having previously forecast 2.5% in November.

It said that continued low inflation and falling unemployment were likely to boost the economy. But the CBI added that the ongoing "volatility" in the eurozone, Greece and Ukraine will continue to cause concern and risk.

The lobby group is predicting that the real-term wage growth seen by consumers in recent months will lead to an increase in household spending. But there were concerns aired by various key figures like the governor of the Bank of England, Mark Carney, throughout 2014 that the growth of the UK's economy was too reliant on consumer spending. In positive news relating to those claims, the CBI is forecasting business investment to rise by as much as 5.8% in 2015.

Businesses are seeing more room for investment in their finances as a result of falling oil prices, the CBI said.

"While lower oil prices are keeping costs down for businesses and consumers, the North Sea oil companies are suffering, harming jobs and investment in the industry," said Katja Hall, CBI deputy director-general.

"Now is not the time for complacency, but falling unemployment coupled with improving wage growth and rock bottom inflation should mean that people see more money in their pockets."

In other forecasts, the CBI also expects oil prices to remain below $65 a barrel in 2015 and inflation to stay under 1%.

A Treasury spokesperson said: "This is welcome news for households and families, but the job is not yet done so we must keep working through the plan that is delivering economic security in an uncertain world economy."

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