Gordon Brown has warned that wage discipline in the public sector is essential to preserve stability in the economy.

Addressing the annual conference of Amicus, the chancellor told his audience that there would be no turning back from the government's reforms to the public services.

However, it also emerged yesterday that the Bank of England's monetary policy committee believes there is only a 20 per cent chance he will hit his growth forecast for this year.

Rather than economic growth being between 3 and 3.5 per cent in 2005, as the chancellor predicted in his March Budget, the committee thinks there is a one in two chance that the economy will grow by less than 2.6 per cent in 2005.

Brown also told Amicus delegates that he would resist pressure to end Britain's right to opt out from the working time directive requiring employees work no more than 48 hours a week.

"Because 50 per cent of our trade is with Europe ... and because economic reform matters, I have to tell you that we will resist the opt-out being removed," the chancellor said.