Professor Patrick Minford, an outspoken Liverpool University professor, will be replaced when his appointment expires at the end of the year by Roger Bootle, chief economist at HSBC Markets and a visiting professor at Manchester Business School.
Professor Minford, a committed Thatcherite, ruffled Treasury feathers earlier this year by accusing the Chancellor, Kenneth Clarke, of failing to understand the economy and of jeopardising the Conservatives' re-election chances. He has recommended big cuts in interest rates and taxes, putting him in a minority on the Treasury's Panel.
He said: "Being on the panel has been frustrating, but I put my views across and I enjoyed it." He welcomed the choice of Mr Bootle, who said yesterday that he was most concerned at this juncture about the strength of the exchange rate.
"There is a serious danger of a repetition of the traditional British policy error, which would be catastrophic for industry," Mr Bootle said. The Treasury likes to have a wide range of views represented by the six wise persons - cynics suggest it can help to justify any policy. Mr Bootle agreed that although he and Professor Minford used very different intellectual frameworks, they had many views in common.
Both believe that interest rates can fall without the risk of higher inflation because labour market deregulation means unemployment has not reached the level where wages start to rise. The title of Mr Bootle's recently published book, The Death of Inflation, gives the flavour of his views very clearly. Both men are also Eurosceptics.
However, Mr Bootle disagrees with Professor Minford's call for a giveaway Budget. "I would argue for tax rises or big spending cuts," he said. That means all six of the Chancellor's advisers are recommending a tough Budget. Two other panel members, Professor Tim Congdon of Lombard Street Research and Gavyn Davies of Goldman Sachs, had their appointments renewed for another year.
The remaining three - Kate Barker of the CBI, Bridget Rosewell of Business Strategies and Martin Weale of the National Institute of Economic and Social Research - have another two years to serve.Reuse content