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http://uk.news.yahoo.com/5/20081029/tuk-more-than-2m-out-of-work-by-xmas-45dbed5.html
'More Than 2m Out Of Work By Xmas'
50 min ago 29th Oct 2008
More than two million will be unemployed by Christmas and the country will enter a "deep and long-lasting recession" unless interest rates are cut "agressively", according to a leading economist.
David Blanchflower - a member of the Bank of England's Monetary Policy Committee - also challenged the Prime Minister and Chancellor's assertion that Britain is well-placed to weather the economic downturn.
Mr Blanchflower said: "The UK is obviously especially exposed to the financial turmoil because of our dependency on the financial sector, and because the run-up in house prices and debt levels was even greater here than in the United States.
"If rates are not cut aggressively we do face the prospect of a relatively deep and long-lasting recession."
However he did agree with Alistair Darling that Britain's monetary policy must become more flexible.
"I believe the impact of constrained credit conditions has yet to fully feed through to the broader real economy...And recent events in financial markets will likely reduce lending further to both households and firms in the near term," he said.
"This is a key factor underpinning my view that we need a looser monetary policy in the UK."
In his own speech tonight, Mr Darling laid rest to Gordon Brown's so called 'golden rules' - the foundation of a decade of Labour economic policy.
He insisted the principles at the heart of the Golden Rule and the Sustainable Investment Rule remained sound, but that to stick to them rigidly would be "perverse".
"The key thing here," Alistair Darling told Sky News, "is that at the present time, when countries all over the world are asking themselves what do we do in the face of this massive global shock, that you have the flexibility, you have the ability to respond to that by supporting the economy now and then, as you come through it, of course you've got to exercise the discipline that people would rightly expect from any government."
Mr Blanchflower also warned that although there are concerns about inflation, falling prices could ultimately pose a threat to the British economy.
The UK economy will continue to contract and inflation is likely to drop below the 2% target over the next year, he said.
"My concern is that inflation will be below 1% - and maybe even negative."
'More Than 2m Out Of Work By Xmas'
50 min ago 29th Oct 2008
More than two million will be unemployed by Christmas and the country will enter a "deep and long-lasting recession" unless interest rates are cut "agressively", according to a leading economist.
David Blanchflower - a member of the Bank of England's Monetary Policy Committee - also challenged the Prime Minister and Chancellor's assertion that Britain is well-placed to weather the economic downturn.
Mr Blanchflower said: "The UK is obviously especially exposed to the financial turmoil because of our dependency on the financial sector, and because the run-up in house prices and debt levels was even greater here than in the United States.
"If rates are not cut aggressively we do face the prospect of a relatively deep and long-lasting recession."
However he did agree with Alistair Darling that Britain's monetary policy must become more flexible.
"I believe the impact of constrained credit conditions has yet to fully feed through to the broader real economy...And recent events in financial markets will likely reduce lending further to both households and firms in the near term," he said.
"This is a key factor underpinning my view that we need a looser monetary policy in the UK."
In his own speech tonight, Mr Darling laid rest to Gordon Brown's so called 'golden rules' - the foundation of a decade of Labour economic policy.
He insisted the principles at the heart of the Golden Rule and the Sustainable Investment Rule remained sound, but that to stick to them rigidly would be "perverse".
"The key thing here," Alistair Darling told Sky News, "is that at the present time, when countries all over the world are asking themselves what do we do in the face of this massive global shock, that you have the flexibility, you have the ability to respond to that by supporting the economy now and then, as you come through it, of course you've got to exercise the discipline that people would rightly expect from any government."
Mr Blanchflower also warned that although there are concerns about inflation, falling prices could ultimately pose a threat to the British economy.
The UK economy will continue to contract and inflation is likely to drop below the 2% target over the next year, he said.
"My concern is that inflation will be below 1% - and maybe even negative."