Recruitment companies can expect to command higher share prices and raise capital more easily if the latest FTSE all-share index prediction of a 15% rise is correct.

The economy is also forecast to grow, but only by 2.3% - a small improvement on last year's figure of 1.7%. Inflation is set to remain at the government's target rate of 2%.

The report by the National Institute of Economic and Social Research predicts the market will equal its record of 3,266 points, last achieved in 2000.

However, the Institute's UK Economy Forecast predictions will not have a direct impact on companies' hiring policies, says Sue Dodd, director of Agile Intelligence.

“We can expect positive signs for the economy to come into play by the middle of the year. The next few months will be difficult for the labour market because of the rise in unemployment,” she told Recruiter.

The report also said property markets were still over-valued by about 20% and that export growth would strengthen over the next two years.