The government should create 100,000 extra university places next year to address a "crisis" in the youth labour market, according to a former member of the Bank of England's Monetary Policy Committee.

David Blanchflower, professor of economics at Dartmouth College in the US and the University of Stirling, called for one-off extra recruitment in 2012-13 - amounting to a per cent increase in first-year places - to reduce competition for jobs and allow students to wait out the possible recession.

Speaking to Times ÖйúAƬ, Professor Blanchflower said: "All the vice-chancellors I talk to say they have the capacity to do it...Their view is that vast numbers of (rejected applicants) are completely capable of taking these courses, so the expansion could work."

He said "shortage areas" such as science, technology and engineering could be prioritised.

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The jobless total for 16- to 24-year-olds hit a record high of 991,000 in the quarter from June to August, according to the Office for National Statistics. Meanwhile, it is expected that about 200,000 people who apply to university this year will fail to gain a place.

Professor Blanchflower said of his plan: "You're buying yourself time to get the recession out of the way...You're getting people into university and getting them off the street. You are removing those 100,000 people from the labour market."

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He highlighted research on youth unemployment by Lisa Kahn, assistant professor of economics at Yale School of Management.

"If you're 16 to 24, growing up in a recession...hurts you forever, even if you're not unemployed," Professor Blanchflower said.

Graduates able to find employment in a recession often work in "A-level jobs", he added, and are thus pushed down the labour market "pyramid" - with a knock-on effect for those below.

"Everybody enters lower down the pyramid and never quite catches up," Professor Blanchflower said.

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Higher education institutions can recruit 364,000 home or European Union students at undergraduate and PGCE level this year - so an extra 100,000 would constitute a huge expansion.

Even under the new fee regime from 2012-13, such a plan would require extra public expenditure, as student loans will be heavily subsidised by the government.

But Professor Blanchflower said extra spending was justified, and that the coalition needed to recognise that its "Plan A has failed".

There is a "crisis in the youth labour market and the government is doing nothing", he added.

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john.morgan@tsleducation.com.