Four of the six warned that the next move in interest rates might be up to keep inflation low, but two argued that they needed to fall to safeguard recovery, and thought some tax rises could be reversed. The six forecast growth of 2.7 per cent this year and next.
The panel conceded that the economy had achieved a better combination of steady growth and low inflation than they had expected, but said: 'We would be cautious about concluding that this signifies any fundamental improvement in the supply side of the economy.'
The six vary widely in their views on unemployment, with forecasts for the end of 1995 varying from 2.7 million to 1.9 million. All expected government borrowing this year to come in below the Budget forecast of pounds 50bn.
Fresh evidence that the economy continues to grow at a steady rate came as the CSO revised its estimate of growth in national output in the fourth quarter last year from 0.7 to 0.8 per cent, the highest for five years. The CSO now believes that construction output grew by around 1 per cent in the quarter, more than it first thought. But last year's non-oil national output growth rate has been cut from 1.8 to 1.7 per cent.
Consumer spending was responsible for most of the growth in national output over the past year, although a poorer trade position was a drag on growth. Profits grew by almost 10 per cent in the quarter to a record level.