British business group uplifts UK's growth forecast

The Confederation of British Industry (CBI) Monday uplifted Britain's economic growth forecasts for this year and next, claiming the country is on the trace of "twin-engined" recovery.

The British lobbying body is forecasting 2.6 percent growth for 2015 and 2.8 percent for 2016, up from its June's projections of 2.4 percent and 2.5 percent respectively.

The CBI said the upgrade is due to a combination of factors, including signs of recovering productivity in the first half of this year feeding through to stronger wage growth. The continued low inflation from falling commodity prices gives a "a welcome boost" to household spending. And business investment is expected to remain healthy, with CBI's surveys indicating robust plans for capital spending.

But it also warned that downside risks to emerging market growth appear to have intensified, British net trade looks set to drag on GDP growth in both 2015 and 2016.

John Cridland, CBI Director-General, said: "We're encouraged by the twin engined-growth of household spending, spurred by stronger wage increases and low inflation, buttressed by business investment. We're also seeing tentative signs of productivity picking up."

Regarding British benchmark interest rate forecast, the CBI said following more hawkish comments from the central bank recently, in combination with a bit more growth momentum, it now expects interest rates to rise to 0.75 percent in the first quarter of 2016, and then rise at a slow pace thereafter.