The UK economy will pick up this year and is set to enjoy stronger growth in the run up to the next election, according to the latest projection from the Ernst & Young Item Club.

In its Winter economics prospects report, the forecasting group said UK gross domestic product will rise by 2.3 per cent in 2006, after growing by just 1.7 per cent in 2005. The Treasury expects output to expand by between 2-2.5 per cent this year and the consensus for growth from independent economists sits at 2.1 per cent.