Keir Starmer and Rachel Reeves are facing a showdown with unions over a so-called 'wealth tax' at Labour conference.
Unite is expected to try to force a vote on a levy - threatening to cut ties with the party unless the Chancellor's Budget next month shows a 'direction change'.
General secretary Sharon Graham told Sky News that the 'time is getting close' when the union - which donates £1.5million a year - would disaffiliate.
She said the party need to 'be Labour ... do Labour things' and urged Ms Reeves to tear up her fiscal rules so the government can splurge more than £1trillion on bolstering industry.
'My members, whether it's public sector workers all the way through to defence, are asking, 'What is happening here?' she said.
'Now when that question cannot be answered, when we're effectively saying, ''Look, actually we cannot answer why we're still affiliated'', then absolutely I think our members will choose to disaffiliate and that time is getting close.'
Ms Graham cited the Budget on November 26 as 'an absolutely critical point of us knowing whether direction is going to change'.
The clamour has been growing for a 'wealth tax' as Ms Reeves scrambles to balance the books. However ministers have so far ruled it out.
General secretary Sharon Graham told Sky News that the 'time is getting close' when the union - which donates £1.5million a year - would disaffiliate.
Ms Graham warned Keir Starmer and Rachel Reeves they need to alter course at the Budget in just a month's time.
The clamour has been growing for a 'wealth tax' as Ms Reeves scrambles to balance the books. However ministers have so far ruled it out.
The stalling economy, productivity downgrades and rising interest rates have left the Chancellor with a black hole estimated at £30billion to fill.
But businesses have been voicing alarm at the prospect of more eye-watering tax hikes, with warnings they could plunge the country into a 'doom loop'.
Ms Graham She told Sky News' Sunday with Trevor Phillips the Chancellor should rip up her fiscal rules and emulate Germany.
'If we look at Germany, they have changed their fiscal rules and they have got now £1trillion in terms infrastructure and diversification,' she said.
'We have got £50bn to do the exact same job. They (Labour) are going to have to do something quite dramatic, quite radical ... at the Budget in terms of changing course, because if they don't do that then people will going to continue to leave them, that is the reality.'
Asked about a possible leadership challenge from Greater Manchester mayor Andy Burnham, she said there was “no point” changing around the person at the top if policies stay the same.
