Britain could be spared a massive tax raid if the economy bounces back strongly as vaccines are rolled out, a Treasury minister has said.

Jesse Norman raised hopes that the country can get back on its feet without the burden of crippling extra levies to pay for an unprecedented peacetime borrowing spree which has funded the fight against Covid.

If households and businesses burst out of lockdown and unleash pent-up demand, it could mean the biggest recession in 300 years gives way to a major boom - boosting tax revenues and slashing Government borrowing automatically.

It comes as hawks inside the Treasury reportedly wargame hikes including a possible wealth tax as part of a bid to restore stability to the public finances.

Speaking to MPs on the Treasury Select Committee, Mr Norman said that the £100bn savings pile built up by families during lockdowns is evidence that a sharp recovery could yet take hold.

He said: “We may end up with a somewhat delayed but nevertheless very pronounced bounce, and there are features of the economy at the moment which suggest that could be very significant - if you look at the level of household savings, for example, and data like that.

“If you look at the Office for Budget Responsibility’s [forecasts]... the optimistic scenario has us returning to the growth path that they had anticipated in March [2020].

“It is not absolutely obvious that there may be any future need for consolidation."

Mr Norman, who is financial secretary to the Treasury, admitted that tax increases could even hurt efforts to rebuild.

He said: “Some taxation could impede growth, could damage our recovery, could obstruct the transition from extreme Covid circumstances that we are in at the moment back to something approaching normality."

The Government borrowed more than £300bn in the first eight months of this financial year in a record binge as it sought to prop up workers’ incomes and business balance sheets during lockdowns.

This pushed the national debt up well above £2 trillion, and over 100pc of GDP for the first time since the early 1960s. More is to come as borrowing continues apace.

Mr Sunak is thought to have been considering hikes to corporation tax and a possible levy on land to begin tackling the deficit as soon as possible.

Mr Norman said the Government is “still reflecting on” an online sales tax, after the idea was floated in a review of the business rates system.

Asked about a land tax, he said it was “theoretically interesting” but the process of valuing plots would be “an enormous job” and there “are very clear problems associated” with the concept.

Economists have warned that damaging the economy with higher levies risks undermining the recovery and so ultimately harming the public finances.

Mark Littlewood, director general of the Institute of Economic Affairs, said: “After spending billions supporting businesses over the course of the pandemic, punishing them now with a tax hike would be illogical and counterproductive.

"Corporation tax is one of the most inefficient ways of raising government revenue and amounts to a tax on wages, consumers and investment.

“The UK economy is already at or close to its maximum taxable capacity. A hike in corporation tax would slow down economic growth and may even reduce revenue for the Treasury. The government should instead focus on boosting economic growth by relaxing regulation and reducing the tax burden on businesses. This will be the way to begin to balance the books."

Meanwhile the Prime Minister and Chancellor launched a new business initiative called the Build Back Better Council to promote investment, hiring and levelling up.

The group will be composed of 30 business leaders from a range of industries.

The pair hosted a conference call along with the business secretary, Kwasi Kwarteng, to launch the scheme.

A source on the call said: "They all spoke for about half an hour - a lot about the vaccine but also getting the UK back on its feet, what had to be done. There were a lot of really interesting good ideas [from the business leaders] - the next question is what do we make of that.

"I am hopeful. There was a lot of interest in climate change, a lot of interest in green development, new energy, a lot of interest in technology. Skills, innovation and infrastructure - there were a lot of points made under these three headings.”