Britain’s net zero push risks fuelling inflation over the next few years, a leading Bank of England official has warned.

Megan Greene, a member of the Bank’s Monetary Policy Committee (MPC), said green policies were likely to push up inflation for the next two to three years.

Ms Greene warned that carbon pricing, where power plants pay for each tonne of carbon dioxide they emit, would increase energy costs for households and businesses.

She said the Bank’s own research showed the UK’s net zero policy on carbon pricing would reduce output and increase “both energy and non-energy inflation for up to two to three years following the shock” – meaning inflation may stay high until the end of 2028.

Officials are battling to bring inflation under control after it hit 3.8pc in August – significantly higher than the Bank’s 2pc target. Forecasts from Threadneedle Street show that it is expected to climb to 4pc in September.

Rachel Reeves, the Chancellor, last year told the Bank of England it had to take climate change as seriously as growth.

However, Bank officials are coming up against a clash in mandates as net zero policies risk pushing prices higher when the MPC’s main goal is to keep inflation at 2pc.

Speaking in Glasgow, Ms Greene said that while net zero policies were likely to push inflation higher, the shift to a greener economy “is less costly than not undergoing the transition at all or implementing it too late and too slowly”.

Ms Greene is not the first Bank official to warn of the rising costs associated with net zero policies.

In January, Sarah Breeden, the Bank’s deputy governor, said: “There is now evidence that policies aimed at the climate transition were probably more important contributors to the recent rise and fall in inflation than we previously thought.”

Ms Greene added that the uncertainty and risks facing the UK economy meant that Bank officials should maintain “a cautious approach to rate cuts going forward”. Last week, the Bank’s MPC voted to hold interest rates at 4pc.

British companies pay the highest electricity prices of anywhere in the developed world, according to government figures.

Electricity in the UK is now about 50pc more expensive than in Germany or France and four times as expensive as in the US.

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