Ruth Gregory, deputy chief economist at Capital Economics, said they expected Reeves would miss her targets by up to £25 billion, but the figure could be larger if the OBR downgraded its growth forecasts for the UK economy.
“If the budget deficit is larger than £20 billion, Reeves will have to pull one of the big tax levers like VAT, income tax or employee national insurance to make up the difference,” she said.
“Given that the chancellor decided to increase the tax burden on businesses in the last budget by raising employer national insurance contributions, we would expect that this time the burden will fall on households.”