Labour could break their election pledge not to put up income tax, National Insurance or VAT, as the Chancellor Rachel Reeves faces having to plug a new £50billion black hole in public finances. Britons are already facing the economic misery of rising prices, higher energy bills and high street closures.

But experts have warned more pain could be on the way as Ms Reeves seeks to fill another seemingly endless conveyor belt of black holes in the nation’s coffers. At her last Budget in 2024, the Chancellor blamed what she claimed was “£22billion black hole” left by the Conservatives for her having to make “difficult decisions”, including the disastrous move of cutting the Winter Fuel Payment for the elderly.

However, new forecasts from the Office for Budget Responsibility (OBR) is expected to downgrade UK productivity growth expectations by 0.3 percentage points, meaning Ms Reeves could be forced to come back for more money from the public to prop up the economy.

Financial expert Rob Wood, chief UK economist at consultancy Pantheon Macroeconomics, told the Mail Online Ms Reeves may have to find “£50billion in tax rises and spending cuts” to meet her fiscal rules of bringing down borrowing and debt.

Mr Wood said even if there were some positives from the Budget, it was likely reducing the hole in the economy would still “significantly raise the probability that the Chancellor resorts to a manifesto-breaking income tax hike”.

Martin Beck, chief economist at consultancy WPI Strategy, added that the “scale of the challenge” facing Ms Reeves may mean breaking the Labour pledge not to raise VAT, Income Tax or National Insurance may become unavoidable.

He said: “A 2p increase in both the basic and higher rates of income tax, or reversing the 2023-24 NICs cuts, could each raise roughly £20billion – enough to fill the gap, but at significant political cost.”

Defending her position in the Guardian today (Wednesday), Ms Reeves said that Britain does not have to “accept” grim economic forecasts. The Chancellor acknowledged that productivity forecasts from the Office for Budget Responsibility (OBR) could make for tough reading.

But she blamed austerity, Brexit and the pandemic for leaving “deep scars” on the UK’s economy. Ms Reeves insisted she was “determined that we don’t simply accept the forecasts but we defy them” and would not “relitigate the past or let past mistakes determine our future”.

Her comments come as she prepares to deliver a Budget next month widely expected to involve further tax rises as she seeks to close a multi-billion pound gap in her plans.

The Institute for Fiscal Studies (IFS) warned earlier this month that Ms Reeves could need to find £22 billion of tax rises or spending cuts if she is to restore the £10 billion of headroom she left herself against her debt targets in the spring.