“Britain and other rich nations should consider a carbon tax as the most efficient way to reduce greenhouse gas emissions,” Bank of England (BoE) policymaker Catherine Mann said on Monday.

The policymaker spoke at Britain's Resolution Foundation think tank, part of a series looking at long-run challenges to growth.

Key comments

Fossil-fuel prices need to rise from their 2010s average to address climate change.

As wholesale energy prices level off, now is the time to put in place a longer-term strategy for both greater use of market mechanisms and revenue redistribution.

Carbon taxes and emission trading schemes gave clear incentives for people and businesses to reduce their emissions as well as raising revenue, and complemented potentially costly government spending on green technology.

Mann has been a keen supporter of interest rate rises to tackle inflation which peaked at 11.1% last year.

Britain's growth prospects would also benefit from cheaper childcare and more business spending on staff training, which had not recovered from the 2008 financial crisis