Overview

• The think tank warns that balancing the chancellor’s fiscal rules with a no-tax-rise pledge and growing spending needs creates an “impossible trilemma.”
• It calculates that the £50 billion shortfall equates to a 5p hike in both basic and higher-rate income tax.
• NIESR has raised its 2025 GDP growth forecast to 1.3 percent while cutting its 2026 projection to 1.2 percent and expects inflation to average around 3.5 percent.
• Shadow Chancellor Mel Stride argues Labour is defaulting to tax rises because it has mismanaged the economy and cautions this approach could raise borrowing costs.
• The institute urges moderate yet sustained tax increases to rebuild a near-£10 billion fiscal buffer by 2029-30 and reassure bond markets.