Defence Secretary John Healey has warned there will be “consequences” from recent weaker economic forecasts in the nearing Autumn Budget.
The minister insisted no final decisions had been made for the upcoming Budget, which will be delivered by Chancellor Rachel Reeves on 26 November.
However, he acknowledged that the Office for Budget Responsibility (OBR) saw much worse “scarring” on the economy than previously expected, and Reeves would “deal with these challenges”.
The OBR is widely expected to downgrade its productivity forecasts for the UK at the end of November.
In an interview with Sky’s Trevor Phillips, Healey said: “What we do know is that they [OBR] see the deep damage and scarring to be much more serious than previously thought, a combination of years to cuts, Covid and really slow economic growth over 14 years.
“So there are consequences.
“Things do change, and we’ll have the announcements that are needed to deal with those challenges in the Budget.”
The Treasury is looking to fill an estimated £20bn fiscal black hole in public finances, after failed attempts to boost capital, including the U-turn on welfare reforms which dashed hopes of £5bn in savings, and higher borrowing.
Manifesto pledges
Despite speculation Labour could backtrack from manifesto pledges surrounding tax in the Budget, Healey declined to comment when pressed on whether the Government would raise income tax, national insurance or VAT.
He said: “That’s for the Budget and that’s for the Chancellor to announce at the end of the month.”
But, he insisted that Reeves’ would stick to her fiscal rules and take steps towards easing cost of living presures and “drive stronger economic growth”.
Among potential tax decisions, on Friday, it was reported Reeves’ is reportedly considering a ‘mansion tax’, bringing expensive homes into higher tax bands in a bid to raise money.