§ In my Mansion House speech, I announced the establishment of the panel of independent forecasters. My intention in doing so was to demonstrate more clearly that the judgments the Government have to make are not based on one single forecast.172
§ I have now received the panel's first report, and I am most grateful to it for its contribution. The panel recognises that the substantial relaxation of monetary policy has greatly improved the prospects for recovery in 1993. Its forecasts for growth this year vary between ¼ and 2 per cent., with an average of just over 1 per cent.
§ The Treasury's forecast is very similar. Broadly in line with the average of the panel's forecasts, we expect GDP to grow by 1¼ per cent. this year, with the recovery gathering pace through the year. Growth in the year to the second half of 1993 might reach 1¾ per cent., rising to 3 per cent. in the first half of 1994.
§ However, as the panel stresses, uncertainties remain. It is possible that growth this year may exceed the 1¼ per cent. forecast that I have made, but there are significant downside risks, too. It is very difficult to be sure when consumers will feel that their finances are sound enough to support a stronger growth of spending, and there are, as I have said, considerable doubts about the prospects for our major export markets.
§ This will inevitably affect the prospects for the current account. The deficit in 1992 was about £12 billion, and as the economy recovers and the unfavourable short-term effects of the fall in the exchange rate feed through, I expect the deficit to widen this year to £17½ billion. But the measures that I shall be putting in place today should help to strengthen our trade position over the years ahead; and I expect the deficit in the meantime to be readily financeable.