The CBI's forecasts followed a slew of upbeat economic data in recent months, boosting hopes of an entrenched economic recovery in the country.
The British economy recorded its fastest annual growth rate since 2007 last year, with full-year growth at 1.9 percent, up from just 0.3 percent in 2012. Growth in the fourth quarter, however, did slow to 0.7 percent, down from 0.8 percent in the previous three months.
Meanwhile, in December, inflation met the 2 percent target set by the Bank of England for the first time since November 2009. In addition, unemployment fell to 7.1 percent in the three months to November, the lowest level since 2009.
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The CBI expects unemployment to have fallen below the Bank of England's 7 percent threshold by the end of 2013. The U.K. central bank has said it will not raise interest rates from their current record low until unemployment has fallen below 7 percent.
The unemployment rate will continue falling to 6.8 percent in 2014 and to 6.6 percent by the end of 2015, according to the CBI.
"However, with inflationary pressures likely to remain muted, and considerable spare capacity in the economy, the CBI sees no prospect of an interest rate rise until the third quarter of 2015 when it is forecasting the first 0.25 percentage point increase," it said in a statement.