UK is finally facing up to tough economic choices: analysts

For Britain's policymakers, a moment of reckoning seems to have arrived.

- ESHE NELSON

The Bank of England kept rates at 4% amid persistent inflation concerns on Thursday.

This month, lawmakers, central bankers and the country’s fiscal watchdog are all confronting the challenges of an economy that is growing but is also weighed down by high inflation, high debt levels and low productivity.

This quandary will feel familiar to policymakers in other countries, including France, where debt levels are high and the government and public are not aligned on how to tackle it.

But for Britain, a history of sluggish productivity growth, unsatisfactory living standards and weak investment have come to a head. Economists are pushing policymakers to make choices, which could be deeply unpopular, that they hope will make the country’s finances more sustainable and create the foundations for faster economic growth.

“The costs of not acting now are quite high,” said Benjamin Caswell, an economist at the National Institute of Economic and Social Research.

Just three weeks before she will announce her second annual budget, Rachel Reeves, the chancellor of the Exchequer, gave an unexpected speech on Tuesday in which she warned that she would be taking decisions in the “national interest,” not for political expediency.