The CBI has warned that growth will remain "relatively lacklustre" for the next two years but said it no longer believes the UK economy will contract this year.
The business lobby group, which represents more than 240,000 companies, upgraded its growth forecast for gross domestic product to 0% for 2012, from a previous forecast of a fall of 0.3%, and now expects growth of 1.4% for 2013, up from 1.2%, and up to 2% in 2014.
However, it is worried that the continued uncertainty in the eurozone will knock confidence for some time to come.
The CBI forecast comes after official figures estimated a 1% bounceback to GDP growth in the third quarter, ending the longest double-dip recession since the 1950s.
CBI director-general John Cridland said: "Despite the better-than-expected third quarter performance, the UK economy has bumped along the bottom this year, with overall growth fairly flat. While we expect underlying momentum to pick up modestly next year and to be slightly stronger in 2014, the pace will remain relatively lacklustre."
The CBI warned that risks to the economic outlook remain on the downside with the threat of the eurozone crisis and inflation now likely to be higher than previously forecast through 2013 as a result of rises in utility prices.
The organisation still expects inflation to be close to the 2% target by the end of 2013, however, given subdued underlying growth. And despite the recent resilience of the labour market, the CBI has predicted a small rise in unemployment in the first half of 2013.
It warned that uncertainty on the international front is likely to continue to act as a restraint to business investment growth, which is expected to remain modest at around 3.8% this year and 5% in 2013.
Meanwhile, the weak outlook for eurozone growth continues to depress export prospects with net trade expected to be flat this year, followed by an increase next year as conditions in the global economy improve.
Looking ahead, Anna Leach, CBI head of economic analysis, said: "The CBI's latest survey data suggest that growth is set to be marginally positive in the fourth quarter. Prospects for next year are somewhat brighter, when we expect some modest strengthening in household consumption to put the recovery on a slightly firmer footing."
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