Danni Hewson, head of financial analysis at AJ Bell, said: “Today’s figures will come as no surprise to the Chancellor, but they are a timely reminder of the perilous state of the government’s finances.
“The pressure is on to dig into the scrabble bag and come up with enough high scoring tax measures that she can cover the increasing costs of benefits, wages and persistently high debt interest.
“Last year’s hike to employer National Insurance has helped, but Rachel Reeves needs to go much further if she’s to create the kind of headroom needed so the country isn’t treated to another repeat performance next year.
“With income tax back on the prohibited list, she’s going to have to get creative and it will take months, if not years, to fathom if her sums add up.
“Today’s surprise uptick in the energy price cap will add to pressure to deliver cost of living support to the most vulnerable, and she’s already intimated that she will ditch the two-child benefit cap.
“Those measures will only increase the burden on the Treasury’s depleted coffers and money markets will be watching closely to see if this Budget will include cost savings as well as tax increases.”
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