SCOTLAND will at last regain the peak in annual economic output it recorded in 2007, ahead of the Great Recession, next year, a think tank has forecast.

The Centre for Economics and Business Research, in a report published today, has upgraded its growth forecast for 2013 to 1.4% from the 0.8% rate it predicted in July. CEBR has raised its forecast of growth next year to 2.2%, from 1.3%, and calculates this will enable Scotland to "surpass" its 2007 peak in gross domestic product in real terms.

Its projected 2014 growth rate for Scotland exceeds the country's longer-term trend rate of growth of about 2% per annum.

CEBR highlights a "sharp uptick in business confidence" as a factor in its upgraded growth forecasts for Scotland. It also cites a strong increase in consumer confidence, "alongside a reduction in the household saving ratio".

Rob Harbron, senior economist at CEBR in London, said that the economy was "starting to turn the corner".

But he added: "It has been a very slow road up to now."

He saw a "few risks" around the extent to which household spending was helping drive recovery. He cited low pay growth, high inflation, and a cap on benefits as issues in this context.

Strathclyde University's Fraser of Allander Institute warned last week that sustained economic recovery in Scotland was "by no means certain", with rising household spending an "unlikely basis" for durable growth. Fraser of Allander raised its Scottish growth forecasts for 2013 and 2014. But it is significantly less bullish about 2014 growth prospects than CEBR.

The Strathclyde University think-tank raised its projection of Scottish growth this year to 1.3%, from 0.9% in its previous commentary in June. It increased its forecast of expansion in 2014 to 1.8%, from 1.6% in June, and held its growth projection for 2015 at 2.1%. The Scottish economy grew by 0.4% in 2012.

CEBR said it expected Scotland's business services sector to drive economic growth in coming years.

It expects an acceleration of growth in this sector will "come alongside a reduction in the importance of the oil extraction industry".

CEBR said: "Global crude oil prices are expected to cool over the years to 2018, while North Sea oil output is likely to decline over the coming years."

For the period from 2015 to 2018, CEBR has revised its forecast of Scottish growth to an average of 1.6% per year, up from 1.4% previously but well below its predicted rate for 2014.

CEBR said: "Growth is expected to slow after 2014, as public sector spending cutbacks will be needed in order to bring the deficit under control."