Allister Heath has warned of a "kamikaze Budget" this autumn, predicting Chancellor Rachel Reeves will be "ordered to increase taxes massively" to appease financial markets and fund Government spending.
Speaking to GB News, the editor of the Sunday Telegraph said the Government's welfare reform plans were "dead on arrival" following a series of U-turns on cost-saving measures.
The Government is currently facing a rebellion from 120 Labour MPs over welfare reforms aimed at saving up to £5billion annually.
"I predict the Budget in the autumn will be a kamikaze Budget. The Chancellor will be ordered to increase taxes massively to try and placate the financial markets and to come up with even more goodies for Labour's favourite interest groups, and possibly to spend a bit more money on defence," Heath told GB News.
Allister Heath has warned of a "kamikaze Budget" this autumn
GB NEWS
"I think the situation is very bad. We've got a Government that is spending far too much. We're a country that's living beyond its means.
"And yet as soon as the Government wants to trim a few billion pounds out of an exploding welfare budget, you have a massive rebellion from Labour MPs."
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Heath also warned that it is likely to be Britain's middle classes that will bear the brunt of future tax increases, describing it as an "assault on the people who still have some money in this country" and who were "already feeling squeezed, quite hard done by, and certainly not rich."
Shadow Chancellor Mel Stride told the Commons yesterday that even if the planned benefit cuts go through, "almost every respected economist now says tax rises are all but inevitable in the autumn".
Heath echoed these concerns, telling the People's Channel: "We're spending on welfare as if we were a very rich country, but we're no longer a very rich country.
"We're a middling country that desperately needs more economic growth, more investors, more big companies, more entrepreneurs."
Rachel Reeves may have to make some tough decisions at the next Budget
Parliament TVHe warned that Britain was "chasing these people away" with "millionaires leaving, billionaires leaving, tax receipts fleeing the country."
He explained: "We need a completely different economic policy, and we're not getting it from this Government. Not one bit.
"So who's going to pay for this? The middle class is going to pay.
"They're going to have to put up with taxes on pensions, maybe on savers, on cars. Fuel duty is bound to go up, finally, after all this time.
"We're going the way of Argentina, once one of the richest countries in the world, now one of the poorest.
"Societies can decline. Economic growth is not guaranteed. You can become relatively poorer.
"You don't always get richer. And we haven't learned that lesson."
Capital Economics has said that Rachel Reeves may have to find as much as £23bn in autumn, with limited levers to pull because of Labour’s manifesto pledges not to raise income tax, National Insurance or VAT.
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