Recession Alert After Unemployment Rise

There are alarming statements from Professor David Blanchflower. He is part of the interest rate committee for the Bank of England. He warns that a full recession is on the way for Britain. Only direct action from the Bank in the form of drastic interest rate cuts can curb the losses and prevent a situation worse than the current slowdown in the United States.

The rise in unemployment we've seen is just the beginning of this trend according to Professor Blanchflower. The official numbers for unemployment stand at 840,000. This only accounts for those claiming benefits though. Broader definitions show 1.6 million out of work. That would stand at 5.2% of the total workforce. The professor believes that this could go as high as 7% if more isn't done soon.

This statement isn't unfounded. The Chancellor recently announced that the current slowdown could get much worse and that the Treasury would soon change its fiscal rules before the economy breaks them. Professor Blanchflower has been trying to gain support for higher cuts in interest rates over the last nine months. He has been angered by the cautious attitudes shown by the other eight people on the committee. In particular, they are concerned over a rise in inflation, but Blanchflower asserts that a temporary increase could be a necessary evil to stop the coming recession.

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