Economists warned yesterday that a Labour government will come under pressure to hike wealth and pension taxes to get national debt falling.
It comes as official figures from the Office for National Statistics (ONS) showed the deficit hit £2.7 trillion last month – or 99.8 per cent of gross domestic product – its highest since 1961.
Analysis from Bloomberg Economics showed that though Labour has ruled out hikes on income tax, corporation tax and VAT, it may have to embark on tax raids elsewhere to balance the books.
Ruling out some areas of taxation may have boosted its support ‘but it significantly reduces the party’s options for dealing with the fiscal challenge that awaits it if it comes to power’, said Bloomberg economists Ana Andrade and Dan Hanson.
‘A focus on wealth, pensions and businesses will likely be needed to keep the public finances on track,’ they said.
It adds to fears that a Labour government will pile further pain on firms and families already facing the highest tax burden since the 1940s.
Sir Keir Starmer and his Shadow Chancellor Rachel Reeves have refused to rule out a capital gains tax hike.
Bloomberg Economics analysis showed potential changes such as increasing the top rate of the tax from 28 per cent to 45 per cent could bring in between £7.5billion and £17billion for the Treasury.
Labour has also been urged to come clean about its pension tax plans amid fears it could raid the retirement savings of up to nine million workers.