Economic growth in the UK will soon return to levels not seen since the late 1990s, an influential forecasting group claimed today.

The Ernst & Young ITEM Club, which bases its predictions on the Treasury's model of the economy, said the UK could expect two years of rapid growth in the run-up to the next general election.

It claimed however that the growth was more closely linked to the political rather than the economic cycle, and that Chancellor Gordon Brown had "conjured up a classic pre-election boom".

Chief economic adviser Peter Spencer said: "A vibrant, dynamic British economy is what we all want, but the suspicion must be that this boom has been engineered for short-term political reasons, rather than long-term economic considerations.

"And the political business cycle was after all supposed to have been relegated to the history books by the new Labour government in 1997."

The ITEM club said it believed the economy would grow by 3.25% in both 2004 and 2005.

"After three years of misfiring the economy is now firing on all four cylinders," Mr Spencer added.

The recent upturn in the global economy, particularly upbeat news from the US last month, was an excellent platform for recovery in exports, the group said in its Spring forecast.

Strong high street spending, booming house prices and a steadily rising stock market were helping the economy power ahead.

Companies were also beginning to spend and invest more on services and IT while reporting high levels of optimism.

The club is forecasting that 2004/2005 revenues will be about £4 billion below Treasury projections, and that those for 2004/2006 will be about £8 billion in the red.

Monday April 26, 2004