Britain is stuck in a “trap” of high tax and low growth as the cost-of-living crisis intensifies, the boss of the country’s leading business group warns today.

The intervention from CBI chief Tony Danker comes as regulator Ofgem unleashes a 50pc rise in energy prices for families and the Bank of England prepares to hike interest rates for the second time in three months. The Government is also about to lift National Insurance in a blow to workers and employers across the UK.

Mr Danker, speaking at the Centre for Policy Studies think tank, will say: “The current settlement isn’t working. There are rising spending pressures; too much tax; and too little growth. We’re caught in a trap.”

The National Insurance rise planned for April “perfectly encapsulates the problem”, Mr Danker told The Telegraph. The Government is determined to press on with the unpopular policy despite widespread opposition from backbenchers.

He said: “Here we are all wanting to tackle the cost of living crisis. So people are understandably saying ‘let’s put off the NI rise’. But we can’t put off the NI rise because it’s paying for health service growth. So it perfectly encapsulates the rising spending pressures, which are legitimate, the fact that the Government is needing to rely on tax rises to pay for them.”

Mr Danker added: “You’ve only got 1pc to 1.6pc [growth] to actually pay for this stuff. It’s not clear to me that unless you move that 1.6pc number, how you’re going to either avoid austerity or permanently high taxes.”