The health of the British economy is threatened by the risk of recession in the US and interest rate cuts are required, a member of the Bank of England's rate-setting committee said yesterday.
David Blanchflower told the Guardian that interest rates in Britain were "restrictive" and added that those who were worried about inflation at this time were "fiddling while Rome burns."
"Interest rates are restrictive at their current levels and that is why I have been voting for cuts," said Blanchflower, who was the lone policymaker calling for a rate cut at the last Monetary Policy Committee (MPC) meeting earlier this month.
"Recession in the US will impact the UK negatively in terms of output and jobs ... Britain is more dependent on the financial sector than is the case in the US," he said.
"Also, the housing bubble is greater in the UK based on house price to earnings ratios," he said.
Britain's economy experienced a slowdown in the fourth quarter of last year when it expanded by the weakest quarterly rate for more than a year, official data showed last week.
While Blanchflower has argued, and voted for, rate cuts, the majority of MPC members wanted to wait until next month when the central bank publishes its latest quarterly economic projections, minutes of this month's meeting showed.
However, they conceded that "there remained a significant downside risk to UK activity."
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