The FT writes "The Bank of England’s monetary policy committee left interest rates unchanged at 5 per cent for the fourth consecutive month on Thursday, after evidence of a weakening economy left it little scope to toughen its stance against rising inflation."

This is classic stagflation. When the only means of economic regulation is through interest rates, governments have no room for manoeuvre. Underlying the problem is that economic theory offers little guidance on the subject. With an LVT system in place, matters are very different. There is no need to worry about recession because it is safe for governments to spend their way out of slumps - they can give the go-ahead to planned infrastructure schemes in the knowledge that the enhanced land values generated by that infrastructure will be recouped in higher tax revenues.