Rachel Reeves slapped with spine-tingling tax warning after economist forecasts 'hell of a lot of work' to be done

Speaking to GB News hosts Tom Harwood and Dawn Neesom, Mitchell Palmer from the Adam Smith Institute gave the chilling verdict that, quite simply, "the numbers don't look great".

"The Government left itself very little headroom at the last Budget."

The Office for Budget Responsibility (OBR) is gearing up to drop its forecasts for productivity at the annual Budget, which would leave Ms Reeves wallowing in a black hole possibly as large as £30billion.

Officials at the spending watchdog are currently assessing and reviewing their future forecasts after productivity dropped earlier in 2025.

Delivering a sharp word of guidance, the economist warned: "There's a hell of a lot of work to do."

"It’s certainly time for the Government to stop looking in the rearview mirror," he added, after Dawn asked whether it was time for the Government ato ccept responsibility for the state of the economy.

"Although it's certainly true that the picture in the rearview mirror is not particularly rosy. And look forward and try and move some of those levers to get the economy moving."

He said that such an economic approach would see supply-side reforms to regulations, including planning reforms that must be "even faster and even harder than they are".

However, he issued a stark tax warning, adding that, given the economic standing of Britain, the necessary reforms will send off richer Britons "running with their tail between their legs".

Weighing in, GB News' deputy political editor Tom Harwood said that Labour's taxes are already behind wealthy Britons fleeing the nation - and added that the taxes that are to come could threaten "the rest of us".

"Frankly, does anyone believe that it's only going to be the rich hit in this Budget? I mean, she's going to come for the rest of us," he added.

In agreement, Mr Palmer concurred: "We've squeezed that grape for quite a lot. Britain already has one of the most progressive tax systems in the world.

"We already have quite high taxes on property. We already have quite high taxes on higher incomes - those top marginal tax rates, although yes, they are lower than they are in Europe.

"I don't think we want to compare ourselves to the Europeans who are growing even slower than Britain is."

"If the Government wants to square the fiscal circle by raising revenue, I think it's going to be difficult to do that just by targeting the super rich who already do, of course, pay a very large share of our total tax receipts."

In 2024, Ms Reeves and Sir Keir Starmer declared that they would tax "those with the broadest shoulders" - adding to mounting fears that the Chancellor is gearing up for a sequel to her first tax-raiding Budget last October.

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