Best Mortgage Direct – 0845 194 7102

When he was Speaking from the  University of Kent Blanchflower warned that a lack of d action on interest rates will mean the impending recession will be even longer.He stated, “My view remains that interest rates do need to come down significantly – and quickly. If rates are not cut aggressively we do face the prospect of a relatively deep and long lasting recession.
“Certainly the scale of the problems in financial markets has been rather worrying. As house prices have fallen LTVs on existing mortgages have deteriorated, putting significant proportions of the population into negative equity.”

Blanchflower says the cut in rates should be made before next Thursday’s MPC meeting as the turmoil is pushing banks to restrict lending further.

He adds: “I believe the impact of constrained credit conditions has yet to fully feed through to the broader real economy, particularly on firms’ investment decisions.

“Recent events in financial markets will likely reduce lending further to both households and firms in the near term. This is a key factor underpinning my view that we need a looser monetary policy in the UK.”