Mortgage News
Blanchflower: UK needs “a lot more” QE
Former member of the Monetary Policy Committee (MPC) David Blanchflower says the UK will need “a lot more” quantitative easing (QE) to avoid a double dip recession.
Speaking on last night’s Channel 4 News, Blanchflower said the Bank of England should already be pumping new money into the economy.
“It is going to need a lot more QE,” he warned.
He said yesterday’s cautious forecasts from Bank Governor Mervyn King, who said the economy will continue to improve but it will be “a choppy recovery”, were “overly optimistic”.
Yesterday, the Bank of England (BoE) revised down its forecast for UK economic growth and said it expects inflation to remain above the 2% target until the end of next year.
But Blanchflower, who was a member of the MPC from June 2006 to May 2009, says: “There are extremely tough times ahead, as there are in the States, and the Fed has had to stimulate the economy which may have to happen in the UK.
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“Not least because consumer confidence has been dropping fast,” he said.
He blamed the new coalition Government for “talking down the economy”.
“The thing that worries me is there is no Plan B,” he added.
Chief economist at think-tank the Policy Exchange, Andrew Lilico, agreed with Blanchflower’s calls for more QE.
“I think it would be useful for the Bank to print some more money [through QE]. That’s the natural thing to go alongside the kind of fierce fiscal tightening that we’ve seen.”