Autumn tax rise expected as forecasters differ

Forecasters see a tax rise in the autumn Budget as the Chancellor struggles to meet fiscal rules, with predictions spanning several billions and a range of tax tools.

Autumn Tax Rise Pressure Hits Reeves as Forecasts Vary

Forecasters expect Chancellor Rachel Reeves to raise taxes in the autumn Budget to close a gap between current rules and planned spending. With the Office for Budget Responsibility forecast due alongside the budget, the exact size of any tax rise remains uncertain.

Predictions vary widely. Capital Economics sees a package of about £15bn to £25bn, while NIESR suggests the gap could exceed £40bn. Pantheon Macroeconomics and Oxford Economics point to around £20bn to £25bn, and Deutsche Bank expects £10bn to £15bn from tax changes, with other steps filling the rest. Possible measures include freezing tax thresholds, higher rates on income, or new levies such as a health and social care levy, a wealth tax, or changes to VAT. The government has signaled it will avoid broad tax increases on working people, complicating the path forward.

This spread shows a government walking a political tightrope. Reeves must raise revenue without eroding trust with voters who expect relief for working households. The forthcoming OBR forecast will constrain options and shape the final package.

If the plan leans on income tax changes or new levies, the political calculus becomes a test of balance between fairness and growth. The burden on households could grow even if the headline tax burden is framed as a levy or reform. Public reaction, investor sentiment, and long-term growth will all be in play as the details emerge.

Highlights

The budget will reveal how far Reeves is willing to stretch the tax system to meet the rules and fund promised priorities.