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The fears have been raised that Rachel Reeves could be forced to increase taxes after its budget spending plans were destroyed by blocking growth, to run the interest costs of the debts and the global trade tensions.
Economists believe that the £ 10 billion 'headroom' was completely wiped out of the Chancellor who is built into its amounts.
De Niesr said that the government's books seemed to be exactly balanced during the forecast period.
The think tank released concern that if there is a shock for UK PLC, MS Reeves would have to violate its tax rules or yield more income to support activities with expenses.
![Fears Rachel Reeves could have to hike taxes AGAIN as economists warn slumping growth, spiking debt costs and global trade war have smashed her Budget spending plans Fears Rachel Reeves could have to hike taxes AGAIN as economists warn slumping growth, spiking debt costs and global trade war have smashed her Budget spending plans](https://i.dailymail.co.uk/1s/2025/02/12/10/95126201-14388727-image-a-1_1739357937500.jpg)
The National Institute of Economic and Social Research (Niesr) has estimated that the tasks of that scale can deepen the misery for Rachel Reeves
“Without changing the tax and expenditure plans, this means that there is no buffer to absorb cyclic economic shocks for which they would make the rest of the parliament,” said the last Outlook report.
Niesr said that it projected that the British economy would grow by 1.5 percent this year and would raise his earlier prediction of 1.2 percent.
It said that growth would mainly be powered by the increased expenditure program announced in the budget of October, which it expected to have a 'tangible effect' throughout the year.
But the organization said that this would probably be a temporary boost for growth.
That prediction, drawn up at the end of January, is much more optimistic than the Bank of England, which last week reduced the GDP predictions for this year from 1.5 percent to just 0.75 percent.
According to Bloomberg, early estimates produced by the OBR watchdog of the treasury prior to the Spring Statement of the Chancellor that the government has a small shortage.
In October the government said that it was planning to increase the spending by around £ 70 billion a year, supported by increased loans and higher business tax.
![The updated predictions of the Bank of England suggested last week that inflation was more slower than hoped, and the growth has been weak](https://i.dailymail.co.uk/1s/2025/02/12/08/94927367-14388213-The_Bank_s_updated_forecasts_suggest_that_inflation_is_easing_mo-a-11_1739348713142.jpg)
The updated predictions of the Bank of England suggested last week that inflation was more slower than hoped, and the growth has been weak
![](https://i.dailymail.co.uk/1s/2025/02/12/11/95126355-14388727-image-a-9_1739358011988.jpg)
But companies have warned that they are forced to curb and accept investments as they shoulders tax increases, such as increased contributions from national insurance, and wage increases from April.
In the meantime, speculation about the hit for the economy is assembling when Donald Trump pushes through with 'mutual' rates.
There are fears that the US president could impose 21 percent levy on goods from Great Britain to compensate for the impact of VAT.
The National Institute of Economic and Social Research (Niesr) has estimated that the tasks of that scale can deepen the misery for Mrs. Reeves by hitting 0.4 percentage points on the GDP growth in the next two years.
That would be equivalent to around £ 24 billion.
Mr. Trump has already made a 25 percent duty on steel imports, including from the UK, but has promised to reveal a wave of rates today.
The US does not have the equivalent of VAT at the federal level, in which states levy their own taxes.
George Saravelos, the worldwide head of FX Research at Deutsche Bank, pointed out to the concern that the US would focus on VAT as part of the 'reciprocal' rates.
He told the Telegraph that 'much more harmful' would be for the UK, which may mean a rate of 21 percent for import instead of only 1 percent.
![There are fears that Donald Trump could impose 21 percent levy on goods from Britain to compensate for the impact of VAT](https://i.dailymail.co.uk/1s/2025/02/12/08/95121689-14388213-image-a-1_1739348603870.jpg)
There are fears that Donald Trump could impose 21 percent levy on goods from Britain to compensate for the impact of VAT