There will be no cut to VAT on diesel and petrol despite fuel prices surging to a record high and set to climb further in coming weeks.

Mr Martin said: "We are already at 13.5%, if we came down, say to 12%, we would end the derogation that we currently have. We'd then end up coming back on a higher number, which would mean ultimately costlier bills for people."

Fuel prices have surged to a record high and are expected to climb further in the coming weeks, adding to the burden on households' already squeezed budgets.

The AA said the average price is now 177c a litre for petrol and 168c for diesel, rising above the previous record highs in November last year. It means an average driver is paying almost €600 per year more at the pumps than two years ago, new research shows.

Petrol could now hit the grim €2-a-litre milestone "within weeks", experts are warning.

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The rocketing price is on the back of soaring oil prices which are fast heading to $100 a barrel.

Russia is one of the world's biggest oil producers and its supply has not yet been affected by the situation in Ukraine. However, the tense stand-off has made markets 'jumpy' and sent crude prices spiralling.

A barrel of Brent crude, a global benchmark for oil, was almost $95 yesterday, its highest since September 2014. The increases have also been driven by growing demand after the reopening of global economies.

AA spokesman Paddy Comyn said last night: "We're stumbling into €2 a litre, it's inevitable unless something dramatic happens and it doesn't seem like it will.

"The situation in the Ukraine is making the markets jumpy, they're nervous as Russia is a major oil supplier.

"We haven't seen disruption to the supply yet but that doesn't stop the markets getting a bit touchy.'

Mr Comyn added: "People are advised to get a bus or a train or a Luas but that's not much use if you're somewhere that doesn't have them.

"Or get an electric car which is a bit like saying, 'Let them eat cake'. They're expensive.

"The 60% tax figure on the price of fuel is probably not accurate anymore, it's more like 65%.

"And it's not down to the retailer, because the retailers make more money and are better off if the price is lower."

Almost half - 43% - of motorists are cutting back on car use, other consumer spending, or both, a recent poll found. The figure rose to 59% among younger drivers and 53% for lower-income motorists.