The transition to net zero and pressures from ageing populations risk pushing up the tax burden, a City bank has warned.

Analysts at BNP Paribas, a French multinational bank, said that spending demands from several economic shifts meant states would likely be permanently bigger.

As a result, Marcelo Carvalho, the global head of economics, said: “I think it’s very unlikely that the tax burden is going to go down meaningfully anywhere in the world.

“It’s more likely that it either stays where it is or if anything goes higher.”

The warning comes as debt levels in many advanced economies have soared in the wake of Covid and the Europe-wide energy crisis.

Meanwhile, the UK’s tax-burden is racing towards its highest level since the Second World War, with the fiscal watchdog predicting it will be equivalent to 37.7pc of GDP by 2027-2028.

Mr Carvalho said: “With Covid, we had spending going up everywhere – in the West, in emerging markets, everywhere. Everyone’s spending increased. Now it is coming back [down] but I don’t think it comes all the way to pre-Covid levels.”

He added: “The political dynamics [mean] it is very easy to increase spending but very hard to bring it down.”

In the UK, government debt is at its highest level of more than 60 years at around 100pc of GDP, according to the Office for Budget Responsibility.

Despite all chancellors since 2010 committing to bringing debt levels down, they have only fallen in three of the past 12 years.

Mr Carvalho said that the pandemic had created demand for higher health spending “on top of the long-term needs to invest in climate-related activities”.

BNP Paribas’ chief European economist Paul Hollingsworth added demographics was among “very big structural forces that present serious challenges to the public finances in the medium term.”

Read more @telegraph