Overview

• NIESR modelling indicates a 1 percentage-point effective increase in income tax could raise about £30bn by 2029–30 with an estimated 0.05% hit to GDP in the first year.
• The analysis finds a VAT hike would do the most short‑term damage, cutting real personal disposable income by nearly 3% and reducing real GDP by nearly 1% while pushing up inflation.
• Raising corporation tax would have more modest immediate effects but would weigh on investment over time, the think tank says.
• Oxford Economics estimates £20–30bn of fiscal tightening is needed, with about £6bn tied to welfare U‑turn costs and roughly £14–24bn likely to come from taxes as higher gilt yields add around £4bn to spending.
• Reeves faces limited scope for further departmental cuts and a pre‑election pledge not to raise main taxes on "working people," even as the OBR signals weaker growth and a potential £30bn hole.