UK has new vote on rate cut

By John Fraher  |   2008-7-31  |     NEWSPAPER EDITION

BANK of England policy maker David Blanchflower, the only official to vote for an interest-rate cut in July, yesterday said the economic outlook for the United Kingdom has worsened in the past month.

"There has been some pretty bad news since our last meeting," Blanchflower told BBC's Radio Ulster station yesterday. "There's been fairly bad news on retail sales and on a number of things. So we're going to reconsider and take another vote" next week.

The UK's economy is edging closer to its first recession since the early 1990s as house prices slump and consumers cut back spending, according to Bloomberg News. Economic growth matched the slowest pace since 2001 in the second quarter, an index of retail sales dropped to the lowest in 25 years, and the number of jobless benefit claimants jumped the most since 1992.

"Rising unemployment is a concern," Blanchflower said. "We on the Monetary Policy Committee have been thinking about that and obviously worrying about it and the data, the national data, suggest that unemployment has started to rise and it's obviously going to rise a bit further." The central bank's panel will meet next week and take a decision next Thursday.

Since joining the MPC in June 2006, Blanchflower has favored interest-rate cuts more than any other policy maker. In 26 meetings, he voted 11 times to reduce rates, 14 times to keep them unchanged and once to raise them. He declined to speculate on the outcome of the Bank of England's next meeting.

The bank's nine-member panel split three ways in July, with Timothy Besley voting for an increase, Blanchflower favoring a cut and the rest opting to keep the central bank's rate unchanged to fight the fastest inflation in more than a decade.