GOOD economic news has begun to fall on Britain like drops of rain in the midst of a drought. The country is parched: revisions to GDP estimates released last week suggest that output is still 3.9% lower than its 2008 peak, a worse performance than any other G20 country except Italy. As confidence returns, it seems almost impolite to point out that the British economy still has a sickly core of weak investment, productivity and wages, and that hard policy decisions lie ahead. The economy grew at an annualised rate of 1.2% in the first quarter. Surveys of managers suggest official forecasts of 0.8% growth this year will have to be revised upwards. Mortgage credit is flowing again. House prices are surging. The FTSE 100 share index briefly beat its 2007 peak in May.

These numbers are good news for David Cameron. In 2010 the prime minister promised a “forensic, relentless focus on growth”. His chancellor, George Osborne, said the pursuit of growth would be “ruthless”. But with an election looming in May 2015 and a recovery seemingly in the bag, their priorities have shifted to heading off electoral rivals. On July 5th Mr Cameron will summon Tory MPs to Westminster for a vote on a pointless EU referendum bill. Meanwhile Mr Osborne devises cunning traps for Labour over welfare spending.

This is a forensic blinkered pursuit of votes, rather than growth, and it could backfire. Britain’s recovery so far has been hollow (see article). Despite a much cheaper currency, exports continue to disappoint; the trade gap, at 2.2% of GDP, has hardly fallen over the past five years. Consumption props up growth figures—not a problem in itself, but worrying given that real wages, still 9% below their peak at the end of 2007, continue to fall. Debt-to-income ratios, which had been falling, are rising again. The country is borrowing its way to growth.

Most troubling of all, investment has dropped in real terms by a quarter in five years, to just 13.5% of GDP in the first quarter of this year. The global average is 24%. This hurts Britain both now and in the future. Investment boosts current GDP and establishes the productive capital—everything from buildings and roads to machines, software and patents—that economies run on. Losing such a hefty slice is devastating.

Deeper in debt

This a problem for Britain. It is also one for Messrs Cameron and Osborne. Britain’s economy cannot run on consumption unless wages grow. But with little investment there is scant hope of the increase in productivity needed to justify a wage boost. A recovery based on low investment and weak wages could well stutter before 2015.

A relentless attack on the things holding back investment starts with monetary policy. Mark Carney, the Bank of England’s new governor, ought to push in two areas. First, the bank should continue its bond-buying policy, known as quantitative easing. In the past three months the rate on government bonds has risen by close to one percentage point; this raises funding costs for large firms, deterring investment. And astute bosses think about the future, too. If they sense interest rates may rise, the returns on investment look less tempting. This is why Mr Carney should, in August, make a commitment to keep rates low until the economy recovers substantially.

His second task will be to ease the four-year credit crunch that still afflicts British firms. A policy that gives banks access to cheap cash on the condition that they lend it out—the “Funding for Lending” scheme—has helped lower mortgage rates. A recent tweak sweetened the scheme for those that lend to firms. With the mortgage supply looking healthy, Mr Carney should now direct support solely towards British businesses.

Many fiscal distortions deter investment, too. Taxes levied on new buildings mean even developers unable to find tenants must pay. This deters speculative construction; switching to a land tax would help. The tax system could support growth in other ways. A truly ruthless chancellor would consider temporary tax relief on new investment. And the puny 10% tax break on R&D could be raised. Finally, government investment should be raised further and faster, even if this means trampling ring-fences around the NHS and foreign aid.

If that sounds too much, look at investment in another way. In 2012 Britain was 159th out of 173 countries ranked by investment as a share of GDP. Of the 14 farther down the table, seven were in sub-Saharan Africa. The only advanced economies were Malta, Ireland, Cyprus and Greece. Mr Osborne should not be comfortable in this company. If Britain is to remain a G20 economy, it must start investing like one.