Blanchflower Says U.K.’s Recession May Intensify

By Brian Swint

Feb. 25 (Bloomberg) -- Bank of England policy maker David Blanchflower said the U.K. recession may intensify “significantly” and it’s too early to gauge when the economy will start to recover.

“This is not the bottom,” he said in an interview at Stirling University in Scotland today, before delivering a speech. “I expect the first quarter to be worse than the fourth, probably significantly worse. I don’t see any signs of green shoots at the moment.”

The British economy shrank the most since 1980 in the final three months of last year as spending by consumers and companies shrivelled, data showed today. Bank of England policy makers reduced the benchmark interest rate to 1 percent this month, the lowest ever, and defeated Blanchflower’s bid to cut it even further to 0.5 percent.

The bank’s forecasts show that “with monetary policy where it is, overly restrictive, we cannot get inflation back to target unless we ease further,” Blanchflower said. “The question is, how far close to zero is the lower bound? I don’t exactly know.”

Link to article: Bloomberg