The British Chambers of Commerce (BCC) has raised its UK growth forecast, but warns it will be among the worst performing G7 economies until 2020.
The BCC has raised its GDP forecast for 2018 from 1.1% to 1.4% and in 2019 from 1.3% to 1.5%. Its first forecast for 2020 is for 1.6% growth.
The hike is driven by slightly stronger than expected consumer spending.
And it says the UK's export performance is expected to remain robust on the back of strong global growth.
But it says with imports also likely to continue to grow, the contribution of net trade to the UK's GDP growth over the near term is to be limited, "particularly with little evidence of a sterling boost to the UK's overall net trade position".
And despite the upgrades, UK GDP growth is set to remain well below the historical average throughout the forecast period.
"While many individual businesses are doing well, the inescapable conclusion from our forecast is that the UK economy as a whole should be performing better than it is, given robust and sustained global growth," said Dr Adam Marshall, Director General of the British Chambers of Commerce.
"Although strong global conditions have given the UK a bit of a boost through higher export demand in recent months, we have serious concerns about the potential for further growth here at home when the performance of key trading partners slows.
"Sustained skills and labour shortages are also a real issue, with businesses reporting significant difficulties recruiting and retaining the people they need.
"Political uncertainty aside, the biggest brake on higher UK growth is a lack of concerted action to 'fix the fundamentals' here at home, with government attention distracted by Brexit."
The BCC says productivity is expected to improve marginally over its forecast period but will remain subdued, "hampered by deep rooted problems in the economy, including skills shortages and chronic underinvestment in the UK's infrastructure".
The business body says inflation is now expected to have peaked, and will begin easing in the near term as the impact of the post-EU referendum slide in sterling fades.
It also predicts that the next increase in UK official interest rates, to 0.75%, will occur in the second quarter of 2018, followed by another rise in the first quarter of 2019.
The BCC also expects UK public sector borrowing to be £13.4bn higher over the next three years than forecast at last week's Spring Statement by the Office for Budget Responsibility.