Director Weekly  The Bank of England’s interest rate hold will be welcomed by many businesses but the UK economy still badly needs a more full-throated commitment to growth from policymakers.

The MPC’s decision follows better-than-expected inflation data for May. The Consumer Price Index (CPI) rose 2.8% on the previous 12 months, less than was expected: rising fuel inflation was offset by lower price rises elsewhere, including food, clothing, and recreation and culture.  Meanwhile, retail sales data for May has also come in stronger than expected, which will drive hopes of some resilience in household spending.

The interest rate hold should bolster business confidence following the uptick in economic optimism highlighted by the IoD Directors’ Economic Confidence Index for May.

So too will the signing of a memorandum of understanding between the US and Iran. The big hope is that commercial shipping can pass through the Strait of Hormuz at close-to-normal rates before long, which would be a real boost to the global economy – and the UK in particular.

Yet there are difficult practical hurdles to clear. Shipping firms need assurances that the Strait is safe. That could require lengthy mine-clearing operations. Plus, getting the region’s damaged oil and gas facilities working at full capacity again will take time.

So modest inflation numbers, an interest rate hold, decent retail spending figures and a deal in the Middle East are undoubtedly good news for business – yet the positive vibes only go so far.

A benign scenario for the Middle East still leaves inflation and therefore interest rates higher than they otherwise would be, which means real household incomes will plateau and business investment will remain soft. Oil prices are set to remain volatile for some time as a new normal in production and distribution is found and oil reserves are restocked. These will weigh on UK growth this year, pushing it below 1%. Meanwhile the public finances remain under pressure: the latest data shows borrowing running £7.7 billion higher than expected only two months into the fiscal year. This points to a tough Autumn Budget.

And then there’s the domestic policy environment… The defence spending debacle exposed by John Healey’s resignation as Defence Secretary at the start of the week echoes business’s frustrations with the government over the past 24 months. Rhetoric about the importance of either growth or security hasn’t been backed by the big decisions needed. Policymaking has seemed sluggish, cautious and incremental – the Defence Investment Plan allegedly offered £3 billion in extra spending by 2030 when £40 billion is needed by 2035 to meet NATO commitments. Boldness only ever seems to emerge around measures that hold businesses back – be they tax raids or some of the more radical proposals contained in the Employment Rights Act.

We now have a result for the Makerfield by election. The result could have seismic implications for the government – and if a change in political leadership is on the cards, businesses will have many questions. The headwinds affecting the UK economy will not simply disappear with a new face in 10 Downing Street.

This week’s economic data suggest that our tumultuous external circumstances may be easing. But we still need fundamental changes to get the UK economy going and build much greater resilience. The truth is, we haven’t been seeing anything like the kind of progress that’s needed.

If a reset in the government agenda lies ahead, the economy really must be at its heart.