At all levels of economic management — from the economy to the company — forecasting is widely accepted as a crucial aspect of policy making. The purpose of this paper is first and foremost to give a brief, simplified explanation of the method of shortterm (up to two years ahead) national income forecasting used by, for example, the Treasury. Under the 1975 Industry Act the Treasury is required to publish its economic forecasts: one is published at the time of the Budget in the Financial Statement and Budget Report; a second usually some six months later. A technical manual describing the structure of the model of the economy used by the Treasury is also published; and under the 1975 Act the model itself is available for public use.