The Government borrowed another £28bn in March, taking the deficit for the financial year to more than £300bn.

This amounts to 14.5pc of GDP, the highest level since the Second World War.

However this historic deficit was still smaller than previously feared, with the economy having proven more resilient than expected. Fresh data shows strong signs of a bounce back, with rising retail sales and rebounding business output.

Analysts at Capital Economics expect the UK to end 2022 with GDP 3.7pc higher than pre-Covid levels, outstripping European rivals. They expect the German economy to end next year up 2.7pc, with France just about getting back to pre-crisis levels and output in Italy and Spain still stuck below February 2020's size.

As a result, UK officials are now cutting back planned sales of bonds as the Government no longer needs to raise as much cash.

The Debt Management Office plans to issue £252bn of gilts in 2021-22, £43bn lower than stated in proposals published at the time of the Budget in March.

Analysts last year had predicted borrowing could surge to more than £400bn, but the Office for National Statistics found spending on schemes such as furlough has slowed, while tax receipts fell more slowly than feared.

The national debt rose to £2.14 trillion, or 97.7pc of GDP - a level not seen since the 1960s. Stamp duty raised £1.3bn in March, the second-highest month on record, despite the tax holiday on sales of up to £500,000, as frenzied buyers snapped up properties in an exceptionally hot property market.

Rock-bottom interest rates have also helped. Payments on the record debt totalled £38.8bn in the 2020-21 financial year, down from £48.1bn in 2019-20, in part because some payments are linked to the retail price index that fell over the year.

Meanwhile the economy is accelerating. Retail sales in March rose 5.4pc compared with last month, taking total volumes to 1.6pc above the pre-pandemic month of February last year.

Even though non-essential shops in much of the country were only able to open from April 12, clothing chains reported a 17.5pc monthly rise in sales as customers began to go out and socialise again.

Lighter travel restrictions also led to a rise in fuel sales of more than 11pc.

The proportion of spending online edged down to just below 35pc, though this remains well above the 13.2pc share a year earlier.

Business activity accelerated in April at a pace not seen since 2013 as companies ramped up output on the partial reopening.

IHS Markit’s PMI survey of companies jumped to 60, up from 56.6 in March, indicating that companies are expanding at a faster pace. Any score above 50 indicates growth.

The index for manufacturers’ output rose to 59.1, the highest since last summer’s rebound, while services businesses’ score rose to 60.1, a seven-year high.

Both industries reported rising employment and surging demand from customers, as well as higher prices both from suppliers and charged to customers.

Economists expect the recovery to gather more steam through the spring.

Andrew Goodwin at Oxford Economics said consumers were eager to start spending again and he predicted GDP growth of 7.2pc this year.

"Retail sales surged in March, even though many physical stores remained closed, while the reopening of nonessential stores and outdoor hospitality in England on April 12 appears to have generated a surge in spending over the past couple of weeks,” he said.

“Early evidence for April has been encouraging and appears to back our call that the rebound in activity in the second quarter will be very strong, echoing the experience of last summer.”