Business leaders have upped their predictions for UK economic prospects over the next two years.

The British Chambers of Commerce’s (BCC’s) latest economic forecast now pitched gross domestic product (GDP) growth in 2010 at 1.7 per cent, in 2011 at 2.2 per cent and in 2012 at 1.8 per cent.

This upgraded the gloomier forecasts of June which saw GDP at 1.3 per cent this year and two per cent next year.

It also expected consumer prices index (CPI) inflation to remain above the two per cent target until the end of next year and interest rates to start to rise in the second quarter of 2011 hitting 1.75 per cent by the end of next year.

BCC chief economist David Kern urged the Bank of England’s Monetary Policy Committee (MPC) to keep interest rates at 0.5 per cent until the second quarter of next “at the earliest” to see off risks still facing the economy.

He even suggested the MPC should consider further increases in the Quantitative Easing programme if the economy weakend.