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Blanchflower Sees U.k. Jobless Rising 100,000 A Month

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Blanchflower Sees U.K. Jobless Rising 100,000 a Month

Former Bank of England policy maker David Blanchflower said there will be “big increases†in unemployment and Britain must brace itself for the shock.

Jobless claims may rise by an average of 100,000 a month “for the next year or so, and this will be a shock for people,†he said in an interview on BBC Radio 4 today. “People are going to have to get used to these very large numbers. I don’t think people have thought what it would mean to have a million people under 25 unemployed by September.â€

He said it’s “early days†to gauge whether the central bank’s policies are helping to counter the recession. The Bank of England may decide this week to leave the benchmark interest rate at 0.5 percent and to continue its plan to buy bonds with newly printed money, economists say.

“There are risks to the downside,†he said. “We’ve seen over-exuberance in lending and borrowing that’s been a problem. People have had to come back to reality.â€

Blanchflower spoke the day after he stepped down from a three-year term on the Monetary Policy Committee, where he said as early as November 2007 that the U.K. may face a recession, before any of his colleagues.

Policy makers, due to meet on June 4, will refrain from expanding their money-printing plan from the current 125 billion pounds ($204 billion), according to all but two of 39 forecasts in a Bloomberg News survey of economists. A separate survey also showed they will leave the key interest rate unchanged.

Jump in prime mortgage arrears

The proportion of prime UK residential mortgages that are three months or more in arrears has more than doubled in the past year, according to new data.

Moody’s, the credit ratings agency, published data on Tuesday showing that the proportion of mortgages within securitisation vehicles, which are in arrears by 90 days or more, was 0.74 per cent of all loans in the first quarter of 2008. That had jumped to 1.66 per cent in the first quarter of 2009.

The rise is significant because it shows that the economic downturn is now starting to push up mortgage arrears among mainstream borrowers – as opposed to riskier subprime customers with patchy credit histories.

Moody’s said the deterioration could “partly be attributed to the slowing housing market making it more difficult for borrowers to either refinance their way out of arrears problems or sell their propertyâ€.

It added that rising unemployment and a lack of financing options – in the cases where borrowers are experiencing mortgage problems – has also led to a worsening performance across the sector.

The rate of increase in mortgages that are 90 days or more in arrears has been most pronounced in the Granite Mastertrust – which was set up by Northern Rock, the nationalised bank. Here arrears have risen to 4.32 per cent in the first three months of 2009, up from 3.36 per cent in the fourth quarter of 2008. In the first quarter of 2008 arrears were just 0.75 per cent.

Granite’s arrears performance is now on a par with the Mound Mastertrust, a securitisation vehicle set up by HBOS that is now owned by Lloyds Banking Group.

The Mound contains a large number of self-certified loans where borrowers have verified their own income without providing supporting evidence such as pay slips.

The Pendeford Master Trust, which is also now part of Lloyds, reported an acceleration in its arrears to 2.16 per cent of the loan book, against 1.18 per cent in the first three months in 2008.

The Moody’s report notes that Pendeford has seen an increase because its underlying mortgage assets consist of self-certified or buy-to-let loans and the majority repay interest only.

That's a heck of a lot of bad news.

Bull-shit to this recovereh meme today.

Recovereh. Pants.

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I spent an hour or so this evening on the phone to the MD of one of Europe's largest regeneration firms. Previously bullish without fail (bit of New Lab'ite too) now sees no future in the UK, says it's dead, won't recover for 10 years.

Recognises the current bull trap for what it is and says unemployment to go to the max.

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Blanchflower was and is an idiot.

We’ve seen over-exuberance in lending and borrowing that’s been a problem. People have had to come back to reality

Has he had a Damascus moment? Has he realised that the continued low interest rates during a lending frenzy caused the biggest depression the world has known? No, he's still peddling the same old same old.

Any fool could see recession coming, don't give him any credence.

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Guest มร หล&#3
Blanchflower was and is an idiot.

Has he had a Damascus moment? Has he realised that the continued low interest rates during a lending frenzy caused the biggest depression the world has known? No, he's still peddling the same old same old.

Any fool could see recession coming, don't give him any credence.

Bizarrely unbelievable none of these people did. I did. You did.

Is it some ivory tower effect that removes these clowns from reality?

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Bizarrely unbelievable none of these people did. I did. You did.

Is it some ivory tower effect that removes these clowns from reality?

Surely you mean snout in the trough effect?

All liars hanging around together reinforcing their own corrupt beliefs.

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