The CBI business lobby group has increased its forecast for UK economic growth for 2013 from 1% to 1.2%.
It also increased its forecast growth for 2014, from 2% to 2.3%, on predicted increases in disposable income and in business and housing investment.
But it said the desired rebalancing of the economy, from consumer spending to investment and trade, was taking longer than first thought.
It also said that despite signs of a UK recovery, it was “still early days”.
The group, which represents 240,000 UK businesses, says a growth in exports will be cancelled out by more imports as the economy recovers.
But it says the forward guidance on interest rates recently given by new Bank of England governor Mark Carney should add to positive sentiment.
“The economy has started to gain momentum and confidence is picking up, but it’s still early days,” said CBI director-general John Cridland.
“We need to see a full-blown rebalancing of our economy, with stronger business investment and trade, before we can call a sustainable recovery.
“We hope that will begin to emerge next year, as the eurozone starts growing again.”
The CBI’s forecast came at the same time as a separate survey brought further evidence that the recent heatwave boosted sales on the UK’s High Street.
Footfall at shopping locations was up 0.8% in July compared with a year ago, with strong demand for summer fashion and outdoor items, according to the data from the British Retail Consortium (BRC) and its survey partner Springboard.
It also said that the percentage of empty shops in the UK had fallen back from a record high. The BRC said its town centre vacancy rate stood at 11.1% in July – lower than April’s peak of 11.9%.
Last week, figures from the Office for National Statistics showed that UK retail sales rose by 1.1% in July from the previous month.
However, while the warm weather boosted the High Street, it hit internet shopping, according to another survey.
The IMRG Capgemini e-retail sales index, which measures monthly online sales in the UK, found online sales fell 2% between June and July – the first fall in the index’s 13 year history.
Alex Smith-Bingham, from Capgemini Consulting, said: “The warm weather encouraged shoppers to leave their homes and shop on the High Street to enjoy the sunshine. As a result, bricks-and-mortar retailers saw sales rise.”
Year-on-year, online retail sales rose 9% in July; their weakest growth since January 2010.
Recent figures and surveys have shown activity in manufacturing, services, construction and the housing sectors all gathering pace.
The most recent official figures for the UK economy from the Office for National Statistics showed it grew by 0.6% in the three months to June. The figure means that the economy has now recouped more than half the 7.2% of output lost in the 2008-09 recession.
Last week, figures showed that the eurozone had emerged from recession after a record 18 months of economic contraction.
The bloc’s GDP grew by 0.3% in the second quarter of 2013.
The CBI said the improvements in Europe together with a broader global recovery would give a positive boost to exports.
However, combined with an expected rise in imports due to the improvement in the UK economy, the trade contribution will remain small, the CBI says.
In an attempt to boost exports, Mr Cridland called on the government to “get behind talented UK businesses” to help them crack new overseas markets.