The Confederation of British Industry said Britain's economy now looked set to grow by 2.7 percent this year, up from a previous forecast of 2.5 percent made in November.

"The UK is in good shape compared with other economies, with both investment and household spending underpinning economic growth," CBI economics director Rain Newton-Smith said. "But there are still risks to exports from a shaky euro zone."

The Bank of England last week kept its forecast for economic growth this year at 2.9 percent, but raised its forecasts for growth in 2016 and 2017, thanks largely to the boost from lower fuel costs for households and businesses.

The relatively positive outlook could help Prime Minister David Cameron as he prepares for national elections in May.

Also on Monday, property website Rightmove said the average asking price of houses put on the market rose by 2.1 percent in the four weeks to Feb. 7, picking up speed from a month earlier.

Rightmove linked the rise to a shortage of properties on the market which, based on the average number of properties for sale per estate agency, had never been lower at the start of the year than in the first two months of 2015.

Rightmove director Miles Shipside said a change in British pension rules, which will allow people aged over 55 to cash in their retirement savings from April without paying as much tax, could push up prices further if savers plough their cash into buy-to-let properties.

"Agents are already reporting preliminary enquiries from retirees planning to cash in their pension pots and invest in buy-to-let properties," he said.

Britain's housing market came off the boil in the second half of 2014 after regulators introduced tighter controls on mortgage lending. But lender Halifax said this month that prices jumped by their most since May 2014 in January, and the number of mortgage approvals rose for the first time since June.

(Reporting by William Schomberg; Editing by Crispian Balmer)

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