The National Institute of Economic and Social Research (NIESR) said inflation would stay above the Bank's 2pc target until the end of 2030, with a risk that high price rises would become "embedded" in the economy, The Telegraph reported.

This comes after inflation rose to 3.5pc in September, with the Bank warning it could jump to 6pc next year.

Economists at NIESR said policymakers at the Bank had been too slow to raise interest rates, which meant inflation has been above target since August 2021, except for a few months in 2024.

James Smith, a chief economist, said, "The question is, is the Bank being sufficiently active in the face of it, or is there a risk that the history repeats itself and we get that persistent inflation coming back?”

"The Bank doesn't seem to have been sufficiently active so far. It's behind the curve. The risk is, going forward, that you end up with higher inflation getting embedded, and you need more rate rises."

The Bank raised interest rates last week from 3.75pc to 4pc, the first increase since August 2023.

Andrew Bailey, the Bank's Governor, warned that further rate rises could be on the cards as the war against Iran pushes up prices for households and businesses.

Clare Lombardelli, a deputy governor at the Bank, admitted on Tuesday that back-to-back interest rate rises were a possibility.

She added, "It depends on that combination of data and how that constellation fits together. I wouldn't rule December or February in or out.”

"In the absence of evidence of weaker inflationary pressures, I continue to think there is likely to be a case for a further increase in the near term," she said.

Niesr said that inflation would peak at 4.4pc in February, just as most employers decide on any salary increases for the new financial year. The jobs market has coped better than expected despite the war, with unemployment falling to 4.7pc, making pay rises more likely.

Smith said, "All the conditions are there for strong second-round effects, wages being put up, profits being pushed up."

The economists also warned that John Healey, the Chancellor, risks a £30bln shortfall in his spending plans.

If Healey is to increase defense spending meaningfully and shield other departments from 2010s austerity-level cuts, he must raise taxes and find savings elsewhere, NIESR said.

Smith criticized both the Labor Government and its Conervative predecessors, warning that neither had presented credible plans for how to deal with Britain's economic challenges.

He said both parties' positions were "head in the sand, not really facing the fiscal reality that we're dealing with".

Official data published last month showed that Britain's national debt hit £3tln for the first time in September.

Stephen Millard, the NIESR deputy director, said governments had not made sufficient effort to bring the debt pile down.

He added, "What's going to happen with the next shock? It's going to ratchet up again."

An economic slowdown will make reducing debt harder, with NIESR predicting that growth will fall from 1.6pc this year to 1.1pc in 2027.

Lombardelli warned that companies could soon begin laying off staff as the war-on-Iran energy shock drags on.

She said, "So far, businesses have been able to absorb part of their higher energy costs in their margins.”

"But that buffer cannot be used indefinitely. The longer energy costs stay high, the greater the pressure on businesses to restore margins through other means, including higher prices, lower wages or lower employment. A more prolonged shock could therefore force firms to adjust current employment as well as hiring plans."