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MPs tell MPC's Blanchflower to get out and about in his new job

David Blanchflower, the controversial new appointee to the Bank of England's rate-setting committee, was told by MPs yesterday to put in extra effort to make up for the fact he will not live in the UK full-time.

The Treasury Select Committee gave Professor Blanchflower its endorsement as one of the nine members of the Bank's Monetary Policy Committee.

While the committee has no formal powers to veto MPC appointments, a critical report would have been embarrassing for Gordon Brown, who angered the Bank by picking the US-based academic to take over from Stephen Nickell tomorrow.

At the confirmation hearing last week, some MPs had queried Professor Blanchflower's ability to monitor the UK economy when he was only in the UK for 12 days a month. In their report, the Labour-dominated committee said it expected Professor Blanchflower to take an "extremely active role" to communicate with the business community "notwithstanding his working commitments in the US".

The report added: "Indeed, the fact that he will be dividing his time between the UK and the US means he will need to devote particular energy to fulfilling diary commitments in the regions of England, Scotland, Wales and Northern Ireland."

The MPC is likely to be one person short again at its next meeting on 7 and 8 June after the departure of Richard Lambert to take up the job as director-general of the CBI.

Professor Nickell, a specialist in labour markets who voted for a cut in rates at every meeting this year, leaves the MPC after six years to become warden of Nuffield College, Oxford.

In his last contribution to the public debate yesterday, he said there was no clear explanation why people in France and Germany work less than those in the UK, the US or Scandinavian countries.

Analysts expect the MPC to leave rates on hold at its next meeting, although financial markets are pricing in two quarter-point rate rises by spring 2007.

Yesterday Charlie Bean, the Bank's chief economist, became the latest MPC member to add a hawkish tinge to his comments, saying manufacturers were benefiting from a recovery in the eurozone even though higher energy costs were pressuring margins.

"Manufacturing is improving with the pick-up in the euro area and increased exporting," he told the Belfast Telegraph.

"Due to a mix of a rise in energy prices coupled with intense competitive pressure from the Far East, margins have been quite heavily squeezed."

The pound surged 1.4 per cent against the dollar to $1.8855, heading back towards the one-year high above $1.90 hit two weeks ago.

However, the rise was driven by a sell-off in the dollar as traders fretted over the impact that Hank Paulson would have as the new US Treasury Secretary and following a sharp fall in US consumer confidence.