Steeper UK productivity cut of more than £20bn makes tax rises more likely

Rachel Reeves hinted at the pending downgrade on Monday, but said this had nothing to do with Labour policies. Photograph: Jaimi Joy/Reuters

Rachel Reeves will have to account for a bigger-than-expected £20bn hit to the UK public finances in next month’s budget, increasing the likelihood that the chancellor will breach a key Labour’s manifesto pledge not to raise income tax.

The Treasury’s forecaster is preparing a steeper than anticipated cut to UK productivity for the next five years, the Guardian understands.