Business investment 'will grow 7pc in 2014'

Business investment is on course to rise to levels not seen since before the financial crisis this year, helping Britain become the fastest growing economy in the G7, a leading accountancy body said.

The ICAEW expects business investment to grow by 7.1pc in 2014, as stronger optimism finally translates into companies spending their huge cash piles. This would represent the fastest pace of expansion since 2007, and compares with a November forecast of 5.5pc.

The body also raised its 2014 UK growth forecast to 3.3pc, from 2.9pc, which it said would put the UK in line to be the fastest growing G7 economy.

Robust business investment growth is one of the pillars of a sustainable recovery that has so far been driven by consumer spending. Last month, George Osborne said the recovery would not be secure until businesses began investing and exporting more. The Chancellor said the Government would do more to support this in next week's Budget.

Michael Izza, chief executive of the ICAEW, said: "For some time now there have been lingering doubts about the strength of the recovery and whether we were experiencing a false dawn based on consumer spending. These figures go some way to allay those fears.

"Businesses are finally feeling confident enough to commit to an increase in investment at a rate we haven't seen since before the financial crisis took hold."

The accountancy body's upbeat business investment forecasts are in line with recently revised projections by the CBI and the Bank of England, which expect investment to grow by 6.6pc and 11.5pc respectively this year.

Upward revisions to official business investment estimates over the past year showed spending grew for four consecutive quarters for the first time since 2007. However, the level of business investment remains 20pc below its pre-crisis peak.

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