The UK economy will grow by 2.9 per cent this year and 2.4 per cent in 2015, the National Institute of Economic and Social Research (NIESR) has predicted.
The figures, put forward in the organisation's latest quarterly economic review, mark a higher pace of growth than those given in January and, if correct, will mean that gross domestic product (GDP) will surpass its 2008 peak within the next few months.
Previous predictions were for 2.5% growth in 2014 and 2.1% in 2015.
However, on a per capita basis GDP is still significantly below its early-2008 previous peak, and in the NIESR's view will not exceed that level before 2017.
At the end of last year, GDP per capita was more than 6% below its 2008 peak, while the main GDP reading was nearly 2% below the level seen six years earlier.
Unemployment to hit 6.5% in 2014
The review also gave its forecasts for average annual unemployment levels, predicting 6.5% for the current year, notably below the 6.7% figure put forward three months ago.
The 2015 forecast was also lower, at 6.2% from 6.5%.
The number of those unemployed has fallen by one percentage point in the past year, and in the first three months of 2014 fell to 6.9%, which NIESR said continued the labour market's "remarkable feat of significant net job creation".
Looking ahead, it calculated that there was around a 15% chance that the unemployment rate will fall below 5% by the end of the year, and a one in five chance that it will climb back about 7%.
Interestingly, the NIESR noted that although unemployment has fallen, the underemployment 'wedge' has remained.
Annual wage growth has been just short of 2% per annum, with the institute expecting nominal wage growth to accelerate "only modestly" from the second half of the year onwards.
CPI expected to stay close to 2% target
Consumer price inflation (CPI) is set to remain close to the 2% target, with the annual rate having declined below this level in the first quarter of 2014. This dip, the NIESR pointed out, has been supported by the 8% appreciation of sterling in the year to the second quarter of 2014.
"We see few signs of domestic inflationary pressures, with wage growth in particular remaining subdued," the institution said.
Despite expectations inflation will stay close to 2%, the NIESR added that "considerable uncertainty surrounds monetary policy on several dimensions; the path of interest rate rises, where market expectations remain for a rate rise in early 2015; the new equilibrium level, which the Bank has said is likely to be materially below 5%; and the exit strategy for quantitative easing, in particular whether this is used as an active policy tool".
Net public sector borrowing to continue slow decline
The NIESR also said that on the basis of the government's current plans, there would be a continued slow decline in net public sector borrowing this year, and predicted the rate of decline would accelerate in subsequent years, reaching an absolute surplus in 2018.
The net debt-to-GDP ratio will peak in 2015-16, it further forecast.