Ms Reinhart also warned that worries over heavily indebted companies and stock markets risk tying the hands of central banks in their bid to fight rising inflation, another building pressure on economies.

Central banks are concerned the new variant could also increase inflationary pressures battering households as supply chains face more disruption. After taking on huge amounts of debt to endure lockdown, a hike in interest rates by central banks to fight inflation could ramp up the pressure on indebted firms.

Ms Reinhart said corporate indebtedness means the hands of central banks are “a lot more tied than is perhaps widely appreciated”, while inflation will be “more persistent”.

She said: “[Central banks] are also afraid of financial fragility concerns. We have a very leveraged corporate sector that has taken on a lot of high risk debt. A lot of the debt is really junk bond variety with very poor covenants. And so you have a lot of outstanding debt that is corporate debt that’s very sensitive to rate hikes.

“Also tying their [central banks] hands are concerns about what may happen with the equity market.”

The Bank of England and US Federal Reserve have started to unwind Covid stimulus to rein in price pressures. Earlier this month, the Bank hiked interest rates from a record low of 0.1pc to 0.25pc, while Fed rate-setters expect to vote for six rises in borrowing costs over the next two years.

On fighting the economic effects of omicron, Ms Reinhart said many low and middle income countries that already “didn’t have a lot of gunpowder” for stimulus are facing even greater strains if economies are hit. A number of countries are “entering a phase where doing fiscal stimulus is going to be much more challenging”.