By Jonathan Davies

The government's economic plans 'are risky' and could cause economic growth to slow down, according to the EY Item Club.

The business group said the Chancellor George Osborne's plans rely heavily on increased investment and exports from businesses, but stressed that this would not be enough to stop the UK's growth from slowing down.

In its quarterly economic forecast, EY Item Club said the UK economy remains strong, driven by low inflation.

Peter Spencer, chief economic advisor to the EY Item Club, said: "Everybody knows the chancellor has handed over responsibility for looking after those at the bottom end of the scale essentially to companies through the living wage - that's substituting for all of those tax credits.

"But also, he's relying on companies to step up their investment and training plans and of course exports, basically to keep the economy going as households, that's you and me, begin to tighten our belts in response to the big tax increases in the Budget."

The Treasury said the government's plans have "laid the foundations for a stronger economy" and that "hard work on economic recovery is now paying off as people see their pay packets growing faster, which will be helped further by the new National Living Wage".