LONDON - The world should not assume that the worst of the global economic crisis is over, Bank of England monetary policy committee member David Blanchflower said in comments published on Thursday.

"My worry is that there can be many false dawns and we shouldn't just assume that everything is over," the usually dovish economist told The Times newspaper.

"We have to have a rethink. You're going to have to throw away lots of economics and start again. How can anybody not say that when we've had the greatest financial crisis in 100 years."

Blanchflower, who steps down from the MPC at the end of this month, said that while he had long been a lone voice calling for rate cuts on the BoE's rate setting committee, he had taken no pleasure in being proved right when the financial crisis hit.

"I don't think vindicated is the right word," he said. "It's a smug position. I don't feel that in any way. I was fearful of what was coming and it turns out it has come. And I take no comfort in that."

"It is hard to feel vindicated when the economy is in a very difficult position and we are faced with a most enormous recession."

Blanchflower, who started voting for rate cuts in October 2007 as the crisis began to dawn, said that one of his earliest dissenting positions was to argue that there was going to be no explosion in wages as others on the committee were predicting.

"I was a lone voice. Now we are seeing the biggest decline in wages we've ever seen," he told the paper.

He said the Bank had been too narrowly focused on inflation, which meant that it kept rates high for too long.

"It would have made a substantial difference if we'd been cutting earlier on," he said.

Despite having carved out a niche as something of a Cassandra -- a contrarian who no one believes but who ends up getting it right -- Blanchflower said debates on the MPC had always been polite.

"The MPC's greatest strength (is) that one can have a dissenting voice," he said.

"It was extremely uncomfortable to be in a minority of one for a very long time. The worst bit was in the middle of August last year, feeling completely alone. I was a lone voice, and maybe a lost voice, maybe a lost cause. That was the worst part."(Reuters)(//jri)

LONDON - British house prices rose for the second time in three months in May, slowing the annual rate of decline to its weakest since last August, the Nationwide building society said on Friday.

Nationwide said the average house price rose 1.2 percent during May, the second rise since March when house prices turned higher for the first time since October 2007. The annual rate of decline slowed from 15 percent to a nine-month low of 11
percent.

The mortgage lender attributed the improvement to the lack of new properties coming onto the market but cautioned that rising unemployment and restricted lending meant prices were likely to resume their downward path.

Martin Gahbauer, Nationwide's chief economist, noted that during the downturn of the early 1990s there were many months when prices rose, only to fall again. "Although the short-term trend in house prices has clearly improved from where it was at the beginning of the year, it is still too early to say that the market is turning definitively," he said.

"In the current downturn, the combination of rapidly rising unemployment and tight access to credit implies that the last of the price declines has probably not been seen yet."

The figures chime with other surveys in suggesting record-low interest rates have fuelled a rise in new buyer inquiries. However, mortgage lenders are still reluctant to lend to those without a significant equity cushion and figures from the Bank of England showed the country's top six banking groups scaled back lending to home owners last month.

The lack of supply may also be due to a change in legislation that requires home sellers to obtain more information before they can market their property. Since April 6, vendors have been required to complete a "home information pack" before they can put their property on the market. Previously, they could market their home as long as they had applied for this information.

While there is growing optimism that Britain's economy may have passed through the deepest point of the recession, job losses are expected to climb for the rest of the year and most economists expect a recovery, when it comes, to be muted.

In the 1990s, house prices remained under downward pressure for several years after the recession had ended.(Reuters)(//jri)