As the Bank of England's Monetary Policy Committee prepares to release its quarterly inflation report this week, a new independent study says the country’s high tax burden is costing the UK economy an extra £138bn a year in lost wealth.

The research by economist Fred Harrison, and published by the Institute of Economic Affairs, said Gordon Brown’s tax policies were crushing incentives to work, trade and invest, The Business reported.

According to the report, the indirect cost of the tax system is estimated at about 12% of national wealth, taking the total cost of government to more than half of the national income.

Harrison called for urgent action to remedy the tax system