The UK economy could return to growth over the next six months due to falling inflation and more consumer spending, according to Ernst and Young.
The firm's latest ITEM Club forecast predicts that UK inflation could fall from 2.8 per cent to 1.7 per cent by the end of the year, below the Bank of England's two per cent target.
This could boost household finances and consumer spending with real disposable incomes rising by 0.4 per cent in 2012.
Peter Spencer, chief economic adviser at Ernst and Young, said: "Spiralling inflation has cut real wages by 7.5 per cent over the last four years but the squeeze is almost over. Inflation is now coming back to heel, helped by the Chancellor's decision to postpone the increase in fuel duty, falling energy and commodity prices plus tax changes dropping out of the calculation."

But he warned that consumers were more likely to use the extra money to reduce debts rather than spend more.
He said: "The boost to household finances and the subsequent pick up in spending should be enough to push the UK back into positive territory this year but don't expect a consumer-led recovery further out. Longer term, consumers are going to be more focused on reducing their debt burden than splashing the cash."
He said long term growth remained dependent on UK export performance and business investment and that the Bank of England and the Treasury's new 'Funding for Lending scheme' looked "promising." This scheme aims to incentivise banks to lend more in small business loans and mortgages.