LONDON - THE health of the British economy is threatened by the risk of recession in the United States and interest rate cuts are required, a member of the Bank of England's rate-setting committee said on Monday.

Speaking to The Guardian daily, David Blanchflower said that interest rates in Britain were 'restrictive' and added that those who were worried about inflation at this time were 'fiddling while Rome burns.'

'Interest rates are restrictive at their current levels and that is why I have been voting for cuts,' Mr Blanchflower, who was the lone policymaker calling for a rate cut at the last MPC meeting earlier this month, told the newspaper.

'Also, the housing bubble is greater in the UK based on house price to earnings ratios.'

Britain's economy experienced a slowdown in the fourth quarter of 2007 when it expanded by the weakest quarterly rate for more than a year, official data showed last week.

While Mr Blanchflower has argued, and voted for, rate cuts, the majority of MPC members wanted to wait until February when the central bank publishes its latest quarterly economic projections, minutes of this month's meeting showed.

However, they conceded that 'there remained a significant downside risk to UK activity ... from deteriorating credit conditions here and abroad.' -- AFP