RENOWNED economist Danny Blanchflower yesterday declared the Conservative Government was “utterly incompetent”, while arguing the Bank of England was raising interest rates when its own forecasts of UK stagnation showed it should be cutting them.

Mr Blanchflower, a former member of the Bank's Monetary Policy Committee, also said the Tory policy of austerity had “killed poor people” and had “no economic purpose at all”.

Assessing the UK Government’s economic policymaking in the round, he told The Herald in an exclusive interview: “This doesn’t look like a strategy to win an election. It does feel like a turning point. It does feel like a collapse of confidence in competence.”

The labour market economist, who is Bruce V. Rauner ’78 professor of economics at Dartmouth College in New Hampshire in the US and a visiting professor at the University of Glasgow, observed: “They (the Conservatives) told us in 2010 that austerity would generate growth.”

Alluding to former US president Ronald Reagan’s defining question of the 1980 presidential election contest against Jimmy Carter of “are you better off now than you were four years ago?”, Mr Blanchflower said of the current UK situation: “The answer is you are worse off today than you were in 2010.”

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In the context of the squeeze on public spending and general economic situation in the UK, he asked policymakers: “What are you doing about the ordinary person who can’t get a hip replacement? What are you going to do about the ordinary person that can’t get help with mental ill-health?

“What are you going to do for the woman who can’t feed her kids?”

Mr Blanchflower noted that the yield on 10-year UK government bonds was 4.19%, and highlighted the fact that this was higher than Spain at 3.35%, Portugal at 3.08%, Greece at 3.79% and Italy at 4.15%.

He said: “There is the moron premium. Hello Government, how do you explain that?”

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Mr Blanchflower noted the devastating impact of the mini-Budget last September under former prime minister Liz Truss on financial markets, which caused the Bank of England to have to intervene as a pension fund industry which had not been consulted on the likely effect of the fiscal measures came under huge pressure.

And he said of the higher yields on UK government debt: "What that means is every single person in the country is paying the price of Truss’s incompetence.”

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Mr Blanchflower, who is taking part in the University of Glasgow’s tercentenary celebrations of the birth of its former student and professor and famous economist Adam Smith, also challenged the Bank of England’s stance on interest rates at a “Glasgow Talks” event with Glasgow Chamber of Commerce yesterday.

He showed the chart of the Bank’s latest forecast for UK gross domestic product growth published last month, when it raised interest rates by a further quarter-point to 4.5%. He declared this chart, based on market interest rate expectations, showed on the central projection that the UK economy would “not grow at all” between now and 2026.

Mr Blanchflower said: “Zero growth. That is your job – to get the economy growing.”

Flagging his belief that there was a very considerable probability on the Bank of England’s own forecasts that there would be deflation, he asked: “How can you raise rates with a forecast that says you should be cutting rates?

“They are out of their minds.”

Analysing the long-running austerity programme launched by former prime minister David Cameron and erstwhile chancellor George Osborne in 2010, he took issue with the argument made for this key Tory policy that growth collapsed if debt rose to more than 90% of gross domestic product. He hammered home his belief that the research on which this was based was flawed.

And he said of austerity: “What has it done ultimately? It has killed poor people. To be frank – ultimately it is that.”

The economist noted research showing that rises in unemployment caused far greater unhappiness and pain than increases in inflation, in the context of current policymaking and the danger of it increasing the number of people out of work.

Putting this in the context of Adam Smith, Mr Blanchflower cited the famous economist’s Theory of Moral Sentiments work.

Summarising what Adam Smith had written in a section of this book, Mr Blanchflower said: “We care about the wealth of nations but we care about the wellbeing of others. We care about poverty. We care about the human condition.”

Mr Blanchflower highlighted his belief, citing a 0.3-percentage-point rise in the US unemployment rate to 3.7% reported on Friday, that the world’s largest economy was entering recession.

He said: “If the unemployment rate jumps in a single month by 0.3 [percentage points] that is the best measure you can get that the US is entering recession. That happened on Friday.”

Mr Blanchflower added: “Whatever happens in the US happens in the UK six months later. You can’t buck the United States. If the US falls into recession, you are going to follow.”

Writing exclusively in The Herald on Wednesday, Mr Blanchflower observed that Brexit and its “devastating” impact on supply chains, especially for food, "sets the UK apart from every other country".