Bank of England

A hike in UK interest rates is unlikely to happen in the first quarter of 2015 as Britain's economy is set to only expand by 2.4% next year, which is significantly below the 3.1% growth expected in 2014.

According to the EY Item Club, the political uncertainty surrounding the general election next year will lead to businesses holding off investments until the results are announced and therefore slow economic growth.

"The forecast for GDP growth is still relatively good. What has changed is the global risks surrounding the forecast and the headwinds facing investment by firms," said Peter Spencer, EY Item Club's chief economic adviser.

"The UK's export outlook continues to look dreadful. The glimpse of economic rebalancing that we saw in the early part of this year has turned out to be a false dawn.

"Looming political uncertainty risks denting corporate confidence - the question now is how will these risks play out? I expect caution to become the order of the day."

The International Monetary Fund has forecast the UK economy to grow by 3.2%, followed by 2.7%.

The Confederation for Business Industry predicts 3% for this year and then 2.7% in 2015 while the Bank of England (BoE) forecasts 3.5% for 2014 followed by 3%.

The EY Item Club predictions fall in line with the the BoE's chief economist Andy Haldane's comments that weaker global economic growth, stagnant UK wages and productivity and increased political risks, will all contribute to keeping an inevitable interest rate hike at bay.

"Put in rather plainer English, I am gloomier," said Haldane, in response to questions over this view of the British economy.

"This implies interest rates could remain lower for longer, certainly than I had expected three months ago. If there is genuine uncertainty about the path of the economy, the optimal policy response may be to avoid the worst outcomes."

"Britain's economy is writhing in both agony and ecstasy."

UK interest rates have stayed at a record low of 0.5% for over five and a half years however market consensus viewed an impending rise in the first quarter of 2015.