Britannia Radio

Personally I have long been of the opinion that Mr Blanchflower’s  
reputation was over-hyped.  He was right to start interest rates  
moving down as the Bank peversely been dlow to notice the forst onset  
of the (the) ‘downturn’,  But having been caught on the hop the Bank  
then over-did the cuts without having the slightest effect but to  
ruin savers and pensioners   Blanchflower was in the van promoting  
savage cuts, until we are much lower than the Eurozone rates. But his  
reputation still rides high!

However, his pessimism reported here is justified but throwing money  
at totally unspecified non-projects smacks of a flight from reason.


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TELEGRAPH            24.3.09
Unemployment could double to 4m, predicts David Blanchflower
A prominent Bank of England policymaker [Bank of England Monetary  
Policy Committee member David Blanchflower ] has cast doubt on the  
Bank's forecasts and predicted that the recession could be deeper and  
last far longer than policymakers admit.

    By Edmund Conway, Economics Editor

David Blanchflower also warned that unless the Government takes  
drastic action to tackle the recession, spending up to £90bn on new  
projects, unemployment could double to as high as 4m.

The warning, which preceded a sudden fall in the pound, is  
particularly significant since Mr Blanchflower is renowned for having  
presciently warned more than a year ago about the scale and  
significance of the economic crisis. He correctly predicted last year  
that unemployment would reach 2m by the turn of this year.

In a seminar in the House of Commons, the academic, who is this  
summer leaving the Monetary Policy Committee, said the Government had  
to act fast to prevent the recession from leaving a deep and lasting  
scar on the economy and labour market.

He said that the Bank's official forecast, produced in the Inflation  
Report last month, may have been over optimistic when it projected  
that it would recover by the end of the year.

"The Bank's forecast is that there will be a strong recovery and that  
this will pick up later this year, but there are strong arguments  
about why that won't happen," he said. "The problem is that in  
forecasts [economists] tend to be over optimistic. Likewise, the  
probability is that unemployment of 3m is an underestimate."

The statement may be taken as a sign that the Bank will be forced to  
notch down its economic forecast again in the coming months.

The number of people out of work and claiming unemployment support  
jumped last month at the fastest rate on record, but Mr Blanchflower  
pointed out that even more worrying was the fact that some 40pc of  
the unemployed were aged under 25.

He is proposing that the Government spends up to £90bn on schemes  
designed to generate and safekeep jobs. The plan could include  
education initiatives and state-funded construction and other  
projects. He said: "There should be a substantial short term fiscal  
stimulus focused on jobs."

However, the CBI has warned that the Treasury has no room for any  
extra giveaways in the Budget. But Mr Blanchflower said: "In a deep  
recession the rules are very different to how they are in normal  
times. If you did not act swiftly I could easily see unemployment  
reaching 4m."