TAX hikes and spending cuts are on the table as Rachel Reeves scrambles to plug a fresh £20billion black hole.
The Chancellor has been given a bigger headache for next month’s Budget after forecasters reduced her economic wriggle room.
Analysis by the Office for Budget Responsibility is set to downgrade Britain’s productivity by around £20billion, according to the FT.
This will force her to make deeper tax and spending measures to stay within her iron-clad borrowing rules.
The Chancellor said she was going to use next month’s package to build up a bigger economic buffer.
Her £10billion headroom raised last year has been wiped out by high interest rates and policy U-turns.
Yesterday, Ms Reeves signalled she would go even deeper to protect the economy against “future shocks”.
She admitted: “We are looking at tax and spending so we have resilience against future shocks by ensuring we’ve got sufficient headroom.
“And also ensuring those fiscal rules are adhered to.”
She is considering about 100 measures — including a manifesto-busting “nuclear” option to raise income tax.
Ms Reeves was speaking in the Gulf, where she hopes to strike trade deals.
