Forecasts of growth in spare cash

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Consumer spending power is set to rise by 1.5 per cent this year, according to analysis by an economic think tank.

The optimistic outlook was forecast by the Centre for Economics and Business Research (Cebr), which also said it expected the UK economy to grow by 3.1 per cent in 2014 and 2.2 per cent in 2015 – up from previous forecasts of 2.8 per cent and 2 per cent, respectively.

Households are likely to see their living standards improving as earnings growth accelerates and headline inflation remains below 2 per cent for the remainder of the year.

Declining unemployment is also likely to support household finances and overall, Cebr expects real household disposable incomes to grow by 1.5 per cent this year. The think tank also said it expected business investment to grow by 10.1 per cent in real terms this year.