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If the country learnt anything about the economy on Thursday, it was that even the Bank of England’s most senior officials don’t know how to fix it.

A shock split emerged on Threadneedle Street during its latest interest rate decision, as Andrew Bailey was opposed by two of his trusted lieutenants.

While the Governor voted to cut rates from 4.25pc to 4pc, Clare Lombardelli, the Bank deputy, and Huw Pill, the chief economist, opted to hold owing to growing fears over inflation.

In fact, across the Bank’s nine-person panel, policymakers were so divided on how to cure the economy’s ills that they were forced into an unprecedented second vote to break an initial deadlock.

When it comes to resurgent inflation, high borrowing costs and stagnating growth, it appears that Britain’s most esteemed economists are divided.

By a wafer-thin majority of five to four, the Monetary Policy Committee (MPC) decided to cut borrowing costs to levels not seen since March 2023.

However, the split underscores the perilous situation facing the economy.

“This masks the uncommon level of dissent amongst the committee,” says Matthew Swannell, the chief economic advisor to the EY Item Club.

When it comes to monetary policy, the Bank can choose to lower rates to encourage the economy to grow faster. And this is precisely the reason why Bailey voted to cut on Thursday – with alarm bells ringing across the country.

The UK economy shrank in both April and May, first by 0.3pc and then by a further 0.1pc. Meanwhile, unemployment has also risen to a four-year high of 4.7pc.

Weakness across the labour market has led to the number of job adverts having fallen for the longest period on record in the last two decades, prompting experts to warn of a “hiring recession”.

By one provisional measure, there are now 178,000 fewer payrolled employees than a year ago.

However, the lack of attention devoted to the struggling jobs market was notable during Thursday’s meeting, says Alan Monks at JP Morgan.

“It was remarkable how much the statement downplayed the recent loosening in the labour market,” he says.

“It shows that the MPC has become more rattled by the optics of high headline inflation.”

Yet a faltering job market is clearly a risk that rate-setter Alan Taylor is worried about, as he went against the grain to vote for an outsized 0.5 percentage point cut.

By contrast, four of the panel were reluctant to take their foot off the brake at all as they voted to hold at 4pc.

“Policymakers are visibly worried about a more persistent bout of inflation as the headline number is way higher than target,” warns James Smith, at Dutch Bank ING.

The dissenters included Megan Greene and Catherine Mann, who typically err on the side of caution, alongside Lombardelli and Pill.

It was the first time that Lombardelli, a former Treasury adviser, broke from the consensus.

The hawks’ hesitation stems from concerns that the UK will struggle to shake off sticky inflation, which rose to 3.6pc in June.

In its latest assessment, the Bank said it expects inflation to rise to 4pc by September owing to the impact of surging food prices and wage growth. This is double the Bank’s 2pc target.

It comes after a period of extreme inflationary pressures, as the headline rate fell from highs of 11.1pc in October 2022 to lows of 1.7pc last September.

For families battling a cost of living crisis, a renewed inflationary surge will be bad news, compounded by a shaky job market.

“It’s a classic stagflation set-up: rising prices, slowing momentum and limited policy flexibility,” warns George Vessey from payment firm Convera.

In other words, Britain’s economy is experiencing the worst of all worlds: weak growth alongside goods and services becoming more expensive.

This economic conundrum explains why policymakers are so conflicted. Yet for nervous families, the pain is also unlikely to end here.

The National Institute of Economic and Social Research warned this week that Chancellor Rachel Reeves will have to raise taxes to plug a hole in the public finances that could be as big as £50bn.

However, many fear that trying to squeeze more cash out of Britain’s fragile economy will only make the situation even worse, even if the Bank is yet to admit it.

“The elephant in the room is the potential huge fiscal tightening that looks inevitable,” says Derek Halpenny, from one of Japan’s largest banks, MUFG.

“While that might not impact 2026 growth, it still impacts both household and corporate behaviours negatively, and today’s Bank of England update doesn’t really incorporate that negative risk.”