Forecasters predict a winner

Top economic pundits carry off the 'Independent' Golden Guru title

The National Institute of Economic and Social Research produced the most accurate economic forecast for 1995. Its forecasting team, led by former director Andrew Britton and Garry Young, wins the Independent's Golden Guru award for the first time.

Mr Young remains at work on the National Institute's forecast, based on a sophisticated computer model of the economy. He has been joined by a new director, Martin Weale, a member of the Treasury's panel of independent advisers.

The economists at investment bank Lehman Brothers came an extremely close second. They were followed by the London Business School, Kleinwort Benson and Credit Lyonnais.

Five City teams - Salomon Brothers, Robert Fleming, SG Warburg, UBS and Societe Generale - occupied the bottom of the guru league table. Like a majority of the total of 42 forecasts of the British economy, most of these five turned out to have been too optimistic about growth last year.

The pace of the slowdown after a rapid expansion in 1994 took a majority of economists by surprise. Only one forecast - which was also in the botom five - underpredicted the 2.6 per cent increase in GDP.

There was no consistent pattern in retail price inflation forecasts, however. These ranged from 1.8 to 4.2 per cent, compared with an actual increase of 2.9 per cent in the Goverment's target measure.

The National Institute predicts GDP growth of 2.4 per cent this year, slightly slower than last year. It forecasts that target inflation will be unchanged at 2.9 per cent by the fourth quarter of the year while the unemployment rate will fall to 7.4 per cent, equivalent to just over 2 million.

Forecasters line up, page 24