It said job creation continued apace and wage growth was finally picking up. "Coupled with low inflation, this will give a boost to real household incomes, going some way to improving living standards. Lower energy prices are also feeding through to lower operating costs for companies, leaving more space for investment."
The brighter picture for growth this year of 2.7% (from 2.5% expected in November) also reflects the likelihood that the MPC won't raise interest rates until early next year, said the CBI, helping to support growth of 2.6% in 2016.
But political volatility, both domestic and foreign, continues as the UK general election approaches, Greece's fiscal position remains in the spotlight and instability continues in Ukraine. As a result, exporters are finding it harder to secure orders and net trade is unlikely to provide much of a boost to growth over the next two years.
Katja Hall (pictured), CBI deputy director-general, said: "UK growth continues to outshine its counterparts in Europe and progress is 'steady as she goes'.
"While lower oil prices are keeping costs down for businesses and consumers, the North Sea oil companies are suffering, harming jobs and investment in the industry."
She added: "Now is not the time for complacency, but falling unemployment coupled with improving wage growth and rock bottom inflation should mean that people see more money in their pockets.
"But businesses are looking on anxiously as insecurity continues to troll the Eurozone and instability remains elsewhere."
GDP growth is expected to remain steady throughout this year, rising by 0.7% each quarter. GDP is then forecast to grow strongly in 2016, by 2.6% over the year as a whole. This translates into growth of 0.6% a quarter.
However, the UK's export performance has remained disappointing. The CBI said it expected some improvement ahead, with growth increasing from 2.9% this year to 5.5% in 2016. "But with import growth set to rise firmly due to strong domestic demand, the net trade contribution to GDP growth will be small at best."
A weak export backdrop is likely to weigh on the outlook for manufacturing output. While growth is expected to improve slowly, from 1.5% in Q1 2015 to 1.8% by the end of 2016, it will remain underwhelming.
More positively, the UK unemployment rate is expected to continue its downward trend in 2015 and into next year, levelling off at 5.2%, while wage growth is expected to reach 3.0% by Q4 2016.
