Interest rates may double to 1% or hit 1.75% by the end of 2015, according to a Treasury survey of city economists.
The news comes as UK interest rates have been held at their record low of 0.5% for another month by the Bank of England.
Unemployment fell below the Bank of England’s target of 7% for the first time since 2009, and wages are now rising faster than inflation for the first time since 2010.
Last month, Bank of England Governor Mark Carney said the rise in interest rates will be “gradual”.
“We are moving to a period where the end of the recovery is in progress and the start of expansion should happen this year.
“And we are moving to a period where the more conventional operation of monetary policy is a possibility, which is welcome.
“When the time comes to raise rates, we expect it to be gradual and the degree to be limited,” he said.