Chancellor Rachel Reeves faces £10billion tax raid as her spending plans unravel

According to the Institute for Fiscal Studies (IFS) think tank, Rachel Reeves is confronted with a taxing dilemma at the upcoming Spring Statement.

The IFS's comprehensive report suggests that Reeves is caught between the harsh economic climate and her own stringent fiscal regulations, potentially leading to a £10bn tax burden, as reported by City AM.

Despite the Chancellor's hopes that the £9.9bn fiscal buffer post-October Budget would protect the UK from tax increases or spending reductions, this slim margin is likely eroded.

With the Office for Budget Responsibility (OBR) set to release a forecast before the 26 March Spring Statement, further details on the extent of the Treasury's difficulties will emerge.

The IFS has hinted that the government may backtrack on its commitment to hold only one major fiscal event annually, noting: "The Spring Forecast could turn out to be far more consequential than the non-event it was first billed as."

This pledge by the Treasury was made in December when the Spring Statement date was announced: "The Chancellor remains committed to one major fiscal event a year."

Yet, even with potential tax hikes and significant cuts to public expenditure, the Chancellor could still breach her fiscal rules.

"Given economic developments since the autumn, it is possible – though by no means guaranteed – that the Chancellor will now be missing one or both of these fiscal rules under the OBR's updated forecasts," says the IFS.

The group further stated: "Rachel Reeves will be hoping that she is still on track to meet her fiscal rules under the OBR's updated forecast. It is possible that she will be."