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UK jobless to rise 100k/mth into 2010

UNEMPLOYMENT in Britain will continue to rise this year and next, adding some 100,000 more to jobless numbers a month, former Bank of England monetary policy committee member David Blanchflower said toay.

Blanchflower, who stepped down from the MPC at the end of last month, said the current recession made the economic outlook particularly difficult to forecast and tentative signs things may be improving could turn out to be a false dawn.

"The worry is that we have lots of downside risks," he told BBC radio. "I suspect we are going to see unemployment increasing through the rest of 2009, probably through much of 2010 as well, and these increases are going to be large.

"My view is that we are going to see something like an average of 100,000 a month for the next year or so."

Official data last month showed the internationally-recognised ILO measure of unemployment rose by 244,000 to 2.215 million in the three months to March, taking the jobless rate up to 7.1 percent. The number of Britons claiming jobless benefit rose by 57,100.

Asked for his prediction for the economy, Blanchflower, who was for a long time a lone voice calling for rate cuts on the BoE's interest rate-setting committee, said the current situation was "unusually difficult to forecast".

"My suspicion is it's going to be pretty tough, it's going to mean austerity and people are going to have to adjust their living standards because of the big changes that are going on."

In separate comments posted on the BBC's Web site, Blanchflower said: "But we're not out the wood yet -- these green shots [sic] are very tentative, and it may well be that we are seeing false dawns."

"People feel a little better because they've had rate cuts, and their mortgage rates have fallen."


Blanchflower who started voting for rate cuts in October 2007 as the financial crisis began to dawn, said it was still "very early days" to judge whether Britain was doing enough to fight the recession, but he urged more action to help young people.

"We only really started cutting rates in October/November and quantitative easing has come in relatively recently," he said. "Unfortunately, big increases in unemployment are in train."

He said people were going to get used to seeing very large numbers of unemployed, particularly among school and college leavers, and urged the government to do more to create more college and university places.

Blanchflower has in recent months also suggested measures such as exempting the low-paid from paying National Insurance contributions and raising the school leaving age to 18 from the current 16 to help stem youth jobless rises.

"Unless we do something we are going to have a lost generation, and this creates permanent scars on our economy," he said. "I don't think people have quite understood what it would mean to have a million people under the age of 25 unemployed by, say, September."


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