Britons could soon pay more for their favourite chocolate bars as Rachel Reeves’s Treasury scrambles to plug a gaping hole in the nation’s finances with up to £30bn in new tax hikes.
The Chancellor is under intensifying pressure after insiders admitted the Office for Budget Responsibility (OBR) is poised to downgrade productivity forecasts. That shift, expected to be unveiled ahead of the November 26 Budget, would blow apart her plans to balance the books and force a fresh wave of painful revenue-raising measures.
According to senior officials, the Treasury is now “frantically working” on options to fill the gap, which could mean breaking Labour’s manifesto promise not to raise income tax, VAT, or National Insurance. Together with last year’s £40bn tax raid, Reeves may soon preside over a staggering £70bn rise in the overall tax burden in just over a year.
Among the measures being floated is a levy on chocolate, crisps and sugary snacks – a move that would hit millions of households already battling the cost-of-living crisis. A fresh freeze on income tax thresholds, extended by another two years, could quietly drain £7.5bn more from pay packets. Pensioners also face the prospect of seeing more of their retirement income taxed, while small firms could be dragged into the VAT net if the registration threshold is slashed from £90,000 to just £30,000.
The Resolution Foundation, Labour’s favoured think tank, has urged Reeves to take exactly this approach, arguing such reforms could raise the vast sums needed while “levelling the playing field” between different forms of income. But critics warn it will feel like a betrayal to voters who were assured their incomes would be protected.
The backdrop to Reeves’s Budget dilemma is worsening by the week. The OECD has forecast the UK will suffer the highest inflation in the G7 this year at 3.5%, driven by soaring food costs, before easing slightly to 2.7% in 2026 – still the second highest in the group.
Meanwhile, fresh survey data from S&P Global showed growth in the private sector slowing to its weakest pace since May, with demand stalling and job cuts mounting. Economists said the figures should trigger “alarm bells” in Whitehall about the risk of stagflation – the toxic mix of high prices and low growth.
Speaking at the opening of Revolut’s new headquarters in London, Reeves admitted Britain had been the “laggard of productivity performance” since the financial crisis, but insisted Labour’s reforms would attract talent and investment.
Her political opponents were quick to pounce. Sir Mel Stride, the shadow chancellor, accused Reeves of “taxing Britain into stagflation”, warning: “Rachel Reeves seems to think the solution is yet more tax rises. The UK is now teetering on the edge of stagflation, all driven by Labour’s economic mismanagement. This should be a wake-up call: you can’t tax your way to growth.”
The clock is now ticking toward Reeves’s Budget day, with households, pensioners and even chocolate lovers braced for what could be the most punishing round of tax increases in a generation.
