The United Kingdom was one of the first countries to introduce a policy of inflation targeting, with the Bank of England using monetary policy to keep inflation at a target of 2 percent. It worked for 16 years, until 2008 when inflation hit 5 percent, despite the bank’s best efforts. But what’s really troubling is that it hasn’t gone back down, and isn’t expected to head down anytime soon. This persistent inflation, and the public’s expectation of more inflation in the coming years, spells deep trouble for the British economy.

Click here to read the special economic analysis by Peter Warburton, only at LIGNET.com.