The chancellor is also expected to extend the freeze on personal tax thresholds

Rachel Reeves is set to plug a looming £30bn hole in the public finances with a “dog’s breakfast” of tax hikes, according to new analysis.

The Institute of Economic Affairs warns that the gap will likely be addressed by combining broad-based income tax rises with a patchwork of smaller, targeted measures.

The gap, which has widened since March 2025 forecasts, stems largely from spiralling public spending rather than economic shocks.

Roughly £20bn of the shortfall reflects a long-overdue downgrade in productivity forecasts, with the remainder resulting from government policy choices.

This includes scrapping a £5bn welfare savings package and spending favourable economic assumptions instead of banking them.

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