Peter Spencer, chief economic adviser to the club, which uses the Treasury’s own economic model, predicted that the government would be able to announce this achievement later this year.
He said the step would amount to a ‘ringing endorsement’ of its management of the economy.
In its quarterly report, the ITEM club painted a rosy outlook for the economy, predicting 3.5% growth this year and 3% in 2005 against a backdrop of the best quarter for the world economy since 1988.
But the Spencer raised concerns over Gordon Brown’s ability to stick to his ‘golden rule’ of balancing the budget, excluding investment over the economic cycle.
The chancellor was ‘very likely indeed’ to breach the rule after, if not before, a general election ‘with the loss of credibility that this would entail’, he said.
Other concerns included oil prices and the housing market, the state of which Spencer said gave rise to the possibility – albeit distant – of a crash.
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