When the world won't listen

27 Jan 2009 12:17:00.000

PA 17/09

With Britain officially in recession, the man whose warnings were controversially ignored by the Bank of England and who was branded “bonkers” by the media, will speak this week at The University of Nottingham about the current economic crisis.

Monetary Policy Committee (MPC) member — Professor David "Danny”Blanchflower —will explain what could have been done and how he was ignored by MPC members. His isolated stance placed him squarely at the centre of one of the highest level policymaking disputes ever made public.

Professor Blanchflower will speak at the Globalisation and Economic Policy Centre (GEP), based at the University Park Campus.

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Professor Blanchflower consistently predicted the UK would pay a heavy price and fall into a lengthy downward spiral if the bank failed to slash interest rates to stimulate the ailing economy.

Yet it was only amid the panic and financial aftershocks generated by the dramatic collapse of the giant investment bank Lehman Brothers that action was finally taken.

Professor Blanchflower became a member of the MPC in June 2006, but Chancellor Alistair Darling recently confirmed to MPs that he will step down in May this year.

He was long-regarded as the Committee’s “maverick” — a position illustrated by his monthly voting record on the subject of proposed interest-rate changes throughout much of 2008.

In May and June, when Professor Blanchflower called for a 0.25 per cent reduction, his fellow MPC members — including Bank of England governor Mervyn King —opted for no change.

The same thing happened in July, except one member even voted for a 0.25 per cent increase.

By September Professor Blanchflower was advocating a 0.5 per cent cut, only for the other members again to vote for no change.

Professor Blanchflower recently admitted: “It wasn’t a comfortable time. Externally they called me bonkers. Various former members of the MPC said I didn’t know what I was talking about.

“I was shocked by how many commentators went along with the consensus and how little thought there was about alternatives. Newspapers were saying: ‘Here he goes again. Who listens to him?’”

British-born Professor Blanchflower, the Bruce V Rauner Professor of Economics at Dartmouth College in New Hampshire, flies to the UK each month to take part in MPC meetings.

His lecture, Macroeconomic Policy Responses in the UK, is part of the GEP’s prestigious Leverhulme Globalisation Lecture Series and will take place on January 29.

The GEP is based at The University of Nottingham and is substantially funded by grants from the Leverhulme Trust.

In January 2008 it opened GEP in Malaysia at The University of Nottingham’s purpose-built Semenyih campus, 30km from Kuala Lumpur.

In November 2008 it launched GEP in China at The University of Nottingham, Ningbo, China.

GEP is keen to promote its research work and is committed to communicating its expertise through the media and to assisting journalists wherever able.

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Notes to Editors: This is a public lecture but is likely to attract a lot of interest. Journalists wishing to attend are advised to contact Martin Stott at Bulletin PR who is organising facilities for the media.

The University of Nottingham is ranked in the UK's Top 10 and the World's Top 100 universities by the Shanghai Jiao Tong (SJTU) and Times Higher (THE) World University Rankings.

More than 90 per cent of research at The University of Nottingham is of international quality, according to RAE 2008, with almost 60 per cent of all research defined as ‘world-leading’ or ‘internationally excellent’. Research Fortnight analysis of RAE 2008 ranks the University 7th in the UK by research power. In 27 subject areas, the University features in the UK Top Ten, with 14 of those in the Top Five.

The University provides innovative and top quality teaching, undertakes world-changing research, and attracts talented staff and students from 150 nations. Described by The Times as Britain's "only truly global university", it has invested continuously in award-winning campuses in the United Kingdom, China and Malaysia. Twice since 2003 its research and teaching academics have won Nobel Prizes. The University has won the Queen's Award for Enterprise in both 2006(International Trade) and 2007 (Innovation — School of Pharmacy), and was named ‘Entrepreneurial University of the Year’ at the Times Higher Education Awards 2008.

Story credits

Martin Stott on +44 (0)115 922 8264, martin.stott@bulletinpr.co.uk
Andrew Burden

Andrew Burden - Digital Communications Manager

Email: andrew.burden@nottingham.ac.uk Phone: +44 (0)115 846 8313 Location: University Park

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