By Phoebe Cooke

Britain's economy got the mildest of pats on the back today, when an influential business group was optimistic enough to declare that firms are performing "not great, but OK".

The BCC (British Chambers of Commerce) has predicted gross domestic product (GDP) will grow significantly in the next few years, with record full-year growth for the service sector now forecast in 2013, 2014 and 2015.

It sees gross domestic product (GDP) for 2014 is being raised from 1.7% to 1.9%, and for 2015 from 2.2% to 2.4%.

Director-general John Longworth commented: "The upward revision in our growth forecasts is encouraging. Unfortunately, this does not change the fact that economic growth is still too weak, and the pace of recovery will remain unduly slow for a while yet."

The optimistic growth outlook comes mixed with news that unemployment is predicted to reach 2,650 million in the third quarter of 2014 – 50,000 higher than the number given in March.

Output on the other hand was expected to increase by 0.9% this year, up from a previous growth prediction of 0.6%.

"The upward revision in our growth forecasts is encouraging," Longworth added.

He told the BBC that many businesses were telling him conditions were not too bad.

"Businesses tend to say 'we're doing OK'," he said. "Businesses are in fact doing OK – not great, but OK."

The report indicates that UK public finances will continue to feel the strain but contains some grounds for optimism for chancellor George Osborne.

The slight improvement in growth prospects suggests public sector net borrowing should be slightly lower than was predicted in the Budget.