The UK economy is now in its best shape since the 1990s and will grow by 3.5 per cent this year and a further three per cent in 2005, according to an influential economic think tank.

Boosted by a strong global economy, UK growth will be robust over the next two years, said Ernst and Young's Item Club report.

E&Y did warn that Chancellor Gordon Brown was spending too much, however, and that UK public debt was becoming a problem.

"With a global economy firing on all four cylinders and a UK economy in its best shape since the late 1990s, we can look forward to robust growth in the next two years," said the Item Club's chief economic adviser Peter Spencer.

He said the very low level of unemployment in the UK is a "ringing endorsement" for the government's running of the economy.

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