Prime Minister Keir Starmer has declined to rule out significant tax increases in this year's Autumn Budget, despite his previous assertion that the UK cannot "tax [its] way to growth".
Speaking at a press conference unveiling the Government's 10-year NHS plan, Starmer refused to comment on the scale of potential tax rises needed to address mounting fiscal pressures.
When questioned about City analysts' predictions of tax hikes similar to last year's £40billion raid, the Prime Minister said that no cabinet minister "is going to write a budget in advance".
Chancellor Rachel Reeves had previously pledged not to increase taxes on the scale seen last year.
Labour is under fire for its tax policies GETTY/PA The Treasury is grappling with a £5billion shortfall in public finances following the partial reintroduction of Winter Fuel Payments and delays to Personal Independence Payment (PIP) reforms until after a review is published later this year.
City analysts have cautioned that higher borrowing costs and reduced growth projections could further erode Reeves' narrow fiscal headroom of £9.9billion.
Some analysts predict the Labour Government may need to raise taxes by as much as £20billion this year to restore fiscal stability.
The National Institute of Economic and Social Research (NIESR) has suggested that Reeves might need to establish a larger fiscal buffer than £9.9billion to "rebuild credibility".
Do you have a money story you’d like to share? Get in touch by emailing money@gbnews.uk.
Households could be hit with a tax raid
PAStarmer defended the Government's previous fiscal decisions, stating: "We did really tough stuff in that Budget of last year, we made sure to stabilise the economy and we took the big and heavy decisions early on."
He added: "We've done a lot of the heavy lifting, we've done a lot of the hard yards and the result of that is we're turning our economy around."
The Prime Minister told reporters they would receive the same response if another party was in power.
His comments came as the government faces questions about how it will fund costs from U-turns on welfare reforms and support for struggling businesses.
LATEST DEVELOPMENTS:
The Chancellor is facing pressure over her tax plans
PAReeves separately acknowledged she had a "tough day" on Wednesday when she was seen crying during PMQs, adding that her job was to support Keir Starmer in parliament despite "personal issues".
Bond markets initially reacted with concern yesterday when a tearful Reeves did not receive immediate backing from the prime minister, sparking fears a new Chancellor with a "looser" approach to borrowing might be appointed.
Gilt yields have since stabilised after Starmer told reporters the Chancellor would remain in her position for "a very long time".
Business leaders have called for no additional taxes to be imposed on them, adding to pressure on the Chancellor.
Most Read
