Responding to the latest figures from the Office for National Statistics on public sector net borrowing, Mark Littlewood, Director General at free market think tank the Institute of Economic Affairs, said:

“We don’t need to panic about a one-off major hit to the public finances, but we do need to start to think about how to repair the balance sheet in the years to come. There’s a danger that politicians of all stripes are going to wish the problem away rather than facing it head on.

“With the tax take at its highest level for decades, we are not going to be able to balance the books through even more tax hikes. We are near – or at – the taxable limits of the UK economy. Further tax hikes will dampen growth. The heavy lifting is going to have to be done by meaningful reductions in state spending.

“The problem of the deficit would be mitigated if we found the right recipe to supercharge growth. Sadly, the government’s present thinking is that the best way to achieve growth is through an endless expansion of government programmes.

“Policymakers need instead to focus on deregulation, liberalisation and reducing the heavy burdens placed on businesses by the ever increasing reams of red tape. This won’t just involve a shift of policy – it will require a shift in mind set.”