David Blanchflower threatened to quit BoE

David Blanchflower threatened to quit Bank of England over recession failures

David Blanchflower, the Bank of England policy-maker who is regarded as having seen the scale of the recession earlier than his peers, threatened to resign in frustration at the Bank's failure to tackle the economic crisis, it has emerged.

By Edmund Conway, Economics Editor
Telegraph, 09 Sep 2009

David Blanchflower warned for a year that the UK was facing a deep recession

Blanchflower said the Bank was guilty of "group think" and described those who opposed more quantitative easing at last month's meeting as "the feeble six" Photo: Getty Images

In a searing attack on the Bank, Prof Blanchflower has accused Mervyn King, the Governor, of failing to act fast enough in response to the recession. He said the Bank was guilty of "group think" and described those who opposed more quantitative easing at last month's meeting as "the feeble six".

The attack, in a column for The New Statesman, will be a blow for Mr King and the Monetary Policy Committee, whose reputation had been bolstered by their handling of the crisis in recent months.

Prof Blanchflower wrote: "Clever as Mervyn King may be, he missed the crash and the subsequent recession, and hence, so did the consensual MPC on which I sat. In August 2008, the MPC's quarterly Inflation Report did not even contain the word 'recession', it saw the economy standing still over the next year. I very nearly quit the committee at that point. In an interview that month with Reuters, I called the forecast 'wishful thinking'. Mervyn called me into his office to admonish me for that one."

The column is highly unusual since few previous MPC members have offered any insight into behind-the-scenes events at the Bank. Prof Blanchflower also claimed that he helped engineer the surprise 1.5pc point cut in rates last November after Tim Besley, a fellow MPC member who had been calling for higher rates only a few months earlier, "came to see me to say that he realised he had been wrong and to ask what he could do to help turn things around on the committee".

Prof Blanchflower said he then helped persuade Mr King to authorise the cut, which was later voted through at the official meeting.

However, insiders expressed bewilderment at this account of the decision, saying no deal was struck before the meeting.

In the column, he also urged the MPC to ease monetary policy further, with either rate cuts or quantitative easing. The Bank declined to comment.