Britain's economy, once an object of pity throughout the West, has taken on a new shine that is startling its severest critics.

Almost every day now, government statistical agencies grind out reports with the same theme: Happier days are here again - except for those on unemployment lines.

Today, the good new came on the inflation front. A new retail price index shows that the yearly inflation rate is now down to 144 per cent and sinking fast. By U.S. standards, this is not impressive, but it is a substantial improvement over the 18 per cent pace here this spring and a relief from the horrendous 30 per cent level of two years ago.

The latest index marks the fourth consecutive month of decline. This strengthens the belief that Britain will finally reach single-digit inflation early next year.

The improved price record is no mystery. The trade union pact - just ended - to curb wages this past year is finally paying off.

It would have worked sooner, but last year's severe plunge in the pound shot up import prices and canceled out the pay restraint. Now, with the pact over, a big question here is whether the unions can continue to check their member's demands to make up lost ground.

The pound is no longer a worry. One reason why came earlier this week, when Britain announced a record $550 million surplus in August for its current account. That is the margin by which British sales of goods and services to foreigners exceeded purchases.

The record was partly a freak - an inexplicable drop in purchases of foreign diamonds, ships and aircraft. But for the past three months, when these things were ironed out, the country is still showing a healthy $220 million surplus.

North Sea oil is the answer. The more Britain extracts, the less oil it buys abroad. This could keep Britain's foreign accounts in the black for 10 years or more.

All this given the Bank of England an unaccustomed problem, holding down instead of propping up the pound. The Bank has been selling pounds to eager buyers for yen, dollars and francs, permitting only a small upward drift. The Bank, much more the creature of the Treasury here than is the Federal Reserve in the United States, says that it fears a rising pound will push up the price of British exports and make them uncompetitive.

Critics, however, think the Bank should stop interfering with supply and demand and let the pound rise. That would cut the price of imports,reduce inflation and diminish the incentive for large wage gains. Since exporters did not slash their prices when the pound fell, the argument goes, they can absorb some cut in their windfall profits and would not now raise prices if the pound goes up.

Instead, the Bank of England has been lowering interest rates to discourage the inflow of foreigners' money. Today it brought down its Minimum Lending Rate - roughly the same as the Federal Reserve's discount rate - another 1/2 per cent to 6 per cent. A year ago, it was sky-high at 15 per cent.

All this has meant sharply lower borrowing costs for businessmen and others. The biggest corporations are now paying 8 per cent for short-term loans, almost half the 15 per cent they were forced to pay at the start of this year.

All these factors have had a tonic effect on the stock market. The Financial TImes index - the British equivalent of the Dow Jones - reached a record 549.2 Wednesday, 5.6 points above the old mark set five years ago. Even more astonishing, the bull market here has propelled shares upward by 270 per cent in only 32 months.

Since Wednesday, speculators have crashed in some of their profits and the index has fallen back to 531.9.

The British market is much smaller, more secretive and less well policed than those in New York. Dealers here do not even disclose the number of shares traded. Moreover, that real worth of British shares is less than half what it was at the time of the old record in May 1972. Since then retail prices here have risen a startling 113 per cent.

Despite all this, the economy as a whole - the acutal output of goods and services - is only moving sideways. Industrial production, for example, is precisely where it was a year ago.

Evidently, stock speculators - mostly pension funds, insurance companies, mutual funds and rich think the economy and business profits are heading up.

One reason for this belief is the conviction that the government will now feel free to pump in some stimulus - tax cuts, bigger spending or both. The Bank of England is arguing against such a course, at least until the size of union wage settlements are known in the months ahead.