Looking ahead, current fiscal plans do not suggest any major change in the policy direction. In fact, tax excesses may yet get worse. 

According to the Office for Budget Responsibility, the Government’s latest five-year plan will raise the tax burden as a percentage of GDP to its highest level since the late 1940s. 

Businesses will need to raise their investment spending by 30pc in cash terms by 2026 just to prevent the tax-investment imbalance from worsening. 

It would take a 55pc increase in business investment by 2026 to lower the ratio of taxes to business investment to its 2016 level. While the former seems possible, the latter looks less likely, to put it mildly. 

Business investment is a complex process. Companies base their decisions on a host of factors, including the legal and institutional framework, the real cost of capital and expected real returns, the complexity and burden of regulations, as well as the opportunity to make efficiency gains through capital deepening.

Even if the UK looks favourable on these points, and it mostly does, sustained business investment growth will be frustrated if fiscal policy cannibalises private-sector growth. 

As a result, the much-needed rebalancing to boost private investment and lift growth potential must come from the policy side – that is, tax cuts combined with more moderate spending growth so that the deficit remains at a safe level. 

Unless this happens, the UK may need to endure a period of subpar real growth and excess inflation until fiscal policy is reset in a way that frees up the private sector to properly treat the obvious demand-supply imbalance. 

Household consumption, which is about two-thirds of GDP, is the major driver of demand. It has consistently surprised to the upside in recent years and looks set to remain strong. Households’ balance sheets are healthy, savings are high and labour markets are booming. 

On the supply side, however, things are less healthy. Russia’s invasion of Ukraine has added to the host of global supply-side challenges that emerged during the rapid recovery from the pandemic.

Meanwhile, labour markets are tight across the advanced world. Unlike during the post-Lehman upswing, the UK cannot simply generate growth by importing labour from foreign markets. 

Even as the immediate inflation shock eases, persistent supply troubles could keep inflation elevated at a rate above the Bank of England’s 2pc target – probably close to 3pc on a sustained basis.