Against a background of reports of recovering upbeat business sentiment, one of the Bank of England's senior policymakers warned yesterday that unemployment would continue to climb this year and next, by as much as 100,000 a month, to beyond 3 million.
David Blanchflower, a US-based academic who retires from his position as an external member of the Bank of England's Monetary Policy Committee this week, told Radio 4's Today programme: "The worry is that we have lots of downside risks. I suspect we are going to see unemployment increasing through the rest of 2009, probably through much of 2010 as well, and these increases are going to be large."
Mr Blanchflower was one of the few economists to correctly call the depths of the recession gripping the economy, and has spoken out about the caution of his fellow MPC members.
However, the Chartered Institute of Purchasing and Supply (Cips), in the latest survey of views of its members in the manufacturing sector, detected some improvements ahead. Although the Cips poll indicates that business people continue to expect output to fall, the prospects for employment, while again still declining, are better than at any time over the past six months. The destocking seen in recent months which has hit output especially badly appears to be slowing down.
Access to finance also appears to be improving. The Confederation of British Industry says the rate of deterioration in credit conditions has slowed further over the past three months, and conditions are expected to stabilise in the months ahead. Ian McCafferty, the CBI's chief economic adviser, said: "Big companies who were encountering serious problems getting credit at the start of the year are still finding it difficult, but they expect that the supply of existing credit will get slightly easier over the next few months."
In the housing market, the latest Land Registry figures confirm a picture of gradual stabilisation, showing that property prices were down by 0.3 per cent on the month in April, and 16.2 per cent on the year, the same as March.Reuse content