UK Think Tank Warns Tax Rises Inevitable Ahead of Reeves Budget

Ahead of the UK Budget on November 26, Chancellor Rachel Reeves faces pressure to implement significant tax rises to address a deteriorating fiscal outlook, as forecast by the Resolution Foundation. The think tank, influential in government circles, recommends doubling the fiscal buffer to £20 billion to reassure markets and reduce borrowing costs, though a £15 billion increase may be more feasible. To achieve this while providing cost-of-living support, tax hikes between £20 billion and £25 billion are likely necessary, with income tax increases seen as the best option. The Resolution Foundation proposes a 2p rise in income tax paired with a 2p cut in employee National Insurance to raise £6 billion while protecting most workers, targeting pensioners and landlords instead. Additional measures could include freezing personal tax thresholds and reforms to wealth, property, and motoring taxes, alongside policies to lower energy bills by shifting green levies to general taxation. Despite breaking Labour's manifesto pledge not to raise income tax or National Insurance on working people, this approach aims to balance fiscal responsibility with social support.