Treasury 'frantically working on £30bn of tax hikes' for Budget as Labour think-tank backs pain for pensioners, extending stealth raid, and even hitting CHOCOLATE
Pensioners, ordinary workers and even chocolate-lovers were put on high alert today amid claims the Treasury is working on tens of billions of pounds in tax rises for the Budget.
The outlook seems to be darkening for Rachel Reeves as insiders admit the Office for Budget Responsibility is set to downgrade productivity estimates.
That will effectively take a sledgehammer to the Chancellor's plans, requiring her to take major action to balance the books. Officials are said to be working on the basis that £30billion of extra revenue might be needed - although sources stressed the numbers are uncertain and could still change by November 26.
Together with last year's eye-watering Budget, it means Ms Reeves faces imposing an unprecedented £70billion increase in the tax burden in barely 13 months.
Brits and businesses are already struggling to cope with surging prices and a stalling economy. The OECD forecast today that the UK will have the highest inflation in the G7 this year.
Labour's favourite think-tank has issued a laundry list of tax options designed to raise sums on the scale Ms Reeves appears to require.
Opening Revolut's new HQ in London this afternoon, Ms Reeves admitted 'for too long, Britain has been the laggard of productivity performance'
The Resolution Foundation urged her to put up income tax by 2p – breaking Labour's manifesto pledge – and called for levies on everything from crisps and chocolates to long-haul flights and pensions.
The onslaught could include extending the hated freeze on tax thresholds by another two years, milking £7.5billion extra from hard-working Brits.
And the bar for small firms registering for VAT could be slashed from £90,000 to just £30,000, causing extra red tape and higher charges for sole traders.
According to ITV, the OBR is expected to reduce forecasts for annual productivity growth by around 0.2 percentage points.
That would leave Ms Reeves with £20billion to find by the end of the Budget forecast period. On top of that she could need £5billion for the ditched winter fuel allowance and benefits curbs, and £5billion to cover surging debt interest costs.
Treasury insiders confirmed they are anticipating productivity downgrades, which Ms Reeves is likely to blame on years of economic mismanagement under the Tories.
Opening Revolut's new HQ in London this afternoon, Ms Reeves admitted 'for too long, Britain has been the laggard of productivity performance'.
'Ever since the financial crisis, our productivity has lagged behind our competitors,' she said.
'So while President Trump announced late last week that he will make it harder to bring talent to the US, we want to make it easier to bring talent to the UK,' she said.
This will include expanding 'global talent and high potential' visa routes and making them easier to access by firms that want to hire people from abroad.
'The opening of this fantastic new headquarters in Canary Wharf also, I believe, marks a further vote of confidence in the UK economy and in our future.'
The OECD said price pressures would be worse in Britain this year than any other major economy - and only behind the US next year.
Growth has been pencilled in marginally higher this year at 1.4 per cent. But it is then seen as dropping to 1 per cent in 2026 as higher tax and spending cuts squash activity, adding to a hit from US President Donald Trump's tariff hikes.
Separate PMI figures suggested growth in the private sector has slowed to its weakest level since May - with higher business costs meaning 'subdued' demand and further job cuts.
The bleak figures suggest the UK is at risk of another bout of 'Stagflation', where prices surge but the economy stalls.
Separate PMI figures suggested growth in the private sector has slowed to its weakest level since May - with higher business costs meaning 'subdued' demand and further job cuts
Inflation is expected to reach 3.5 per cent in 2025, 0.4 percentage points higher than the OECD forecast before.
In contrast the rates are anticipated at 3.1 per cent in Japan, 2.7 per cent in the US, 2.2 per cent in Germany, 2 per cent in Canada, 1.9 per cent in Italy and 1.1 per cent in France.
The headline CPI stood at 3.8 per cent in August, unchanged from July but far above the official 2 per cent target. Food inflation has nudged over 5 per cent again, with concerns retailers are having to pass on pressures.
Inflation is seen as sticking far above the Bank of England's target next year, at 2.7 per cent, with soaring food prices pushing up the cost of living.
That would still be the second highest rate in the G7, behind only the US.
In its interim economic outlook, the OECD said the UK would be held back by 'a tighter fiscal stance, higher trade costs and uncertainty' which it said would 'drag on external and domestic demand'.
The Chancellor said the OECD figures 'confirm that the British economy is stronger than forecast – it has been the fastest growing of any G7 economy in the first half of the year'.
She added: 'But I know there is more to do to build an economy that works for working people – and rewards working people. That is what I'm determined we deliver through our plan for change.'
Shadow Chancellor Sir Mel Stride said: 'The OECD confirms what hard-working families already feel - under Labour, Britain is in a high tax, high inflation, low growth doom loop.
'Rachel Reeves seems to think the solution is yet more tax rises. The UK is now teetering on the edge of stagflation, all driven by Labour's economic mismanagement.
'This should be a wake-up call to the Chancellor: you can't tax your way to growth.'
The UK economy grew by 0.7 per cent over the first three months of the year and by 0.3 per cent over the second quarter, official figures show.
The OECD also warned that growth in the world's economy will noticeably weaken over the rest of the year as higher US tariffs take effect, dampening global trade and investment.
The global economy was stronger than expected over the first half of 2025 but activity will 'soften noticeably in the second half of this year', it said.
This is partly due to 'front-loading' delivering a boost to goods production and trade – referring to a rush of imports over the first half.
This has happened as businesses made more shipments as they tried to get ahead of steeper levies on their exports, as a result of Mr Trump's policy changes.
