• Base rates will fall to S per cent by the start of 2000 and to below 4 per cent in 2001, the lowest for almost half a century.

• Inflation (RPI all items) will drop to 1.2 per cent in the final quarter of this year; excluding mortgage interest payments, inflation will decline to 2.1 per cent, below the government's 2.5 per cent target.

• The manufacturing sector is now expected to contract by 1.5 per cent in 1999.

• We continue to forecast growth of 1 per cent for the whole economy.

• Sterling is now projected to trade at 1.36 euros to the pound (equivalent to DM2.65) from 2001 in order to pave the way for entry into EMU; this rate would amount to a 5 per cent overvaluation.