David Blanchflower: 'Double dip into the red is inevitable'

Wednesday 20 October 2010 15:26
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The Government's cuts were branded the "greatest error seen in our lifetime" by a former Bank of England rate setter today who warned the country now faced another recession and a long painful recovery.

Economist David Blanchflower said a double dip into the red was inevitable following the announcement of the comprehensive spending review.

But he predicted worse was to come as any return to growth would be anaemic and not strong enough to generate enough jobs to tackle rising unemployment.

The US-based economist's comments came on the day he was made a CBE for services to his industry and the Bank of England.

Speaking after the Buckingham Palace investiture ceremony hosted by the Queen, he said: "I've already called it the greatest macro-economic mistake in years.

"There's no example in history where such a thing as this has ever worked. The only examples in history is where you've done this and it's failed.

"It generates double dip recession, this looks like the greatest error we've ever seen in our lifetime in economics."

Outlining his fears for the future, he added: "The worry is long anaemic growth. If you get a double dip with steep recovery that's fine, the worry is that you get nothing like that - very slow growth, I call it 'the long slog'.

"It may not be negative growth for a very long time, but the Office for Budgetary Responsibility needs you to get 2.8%.

"Well let's suppose its 1%, that growth's not enough to get unemployment down, unemployment will rise with anaemic growth like that."

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