𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Britons expect to be hammered with an income tax hike this year, are braced for a recession and think Rachel Reeves is likely to exit the Treasury in the year ahead. Polling by Ipsos found 63% think the Government will increase income tax despite a Labour manifesto pledge not to hike rates.

Half (51%) expect the country will tip into a recession in 2026. And just 27% think Ms Reeves will still be Chancellor by the end of the year. A mere 16% consider it likely inflation will dip below the Bank of England’s 2% target.

While 35% think their personal financial situation will improve, 48% expect it will not. Despite recent pushes for a much closer relationship between the UK and the European Union, only 18% think the country will rejoin the single market – a move which would breach the Labour manifesto.

Just 43% think it is likely Prime Minister Sir Keir Starmer or Conservative leader Kemi Badenoch will be in post at the end of the year – and 19% think it probable the Conservatives and Reform UK will “merge into one political party”.

When asked whether 2026 will be better for them than last year, 27% thought it would be, with 31% expecting it to be worse. Among Reform voters, only 18% expected this year to be better, in contrast with just 34% of Labour voters and 23% of those who backed the Tories.

Kate Shoesmith, the British Chamber of Commerce’s director of policy, said: “Our latest economic forecast predicts the economy will expand in 2026, but by just 1.2%. This continues a trend in meagre growth that dates back to the financial crash of 2008.

“Our research also shows that tax rises remain the biggest concern for firms, despite the Chancellor’s recent Budget seeking to allay those fears.”

Ms Shoesmith warned labour and energy costs are likely to increase “inflationary pressures”, meaning only modest interest rate cuts are likely.

She said: “The economy remains stuck in first gear and delivery on growth is now key… Maximising the AI roll-out and global trading opportunities should be key focal points to help break the deadlock.”

Richard Fuller, the shadow chief secretary to the Treasury, warned the “Labour Government’s constant attacks on people who work hard are discouraging the efforts needed to get the economy back on track”.

He claimed: “Only the Conservatives have a plan to cut £47billon from wasteful public spending and welfare and to introduce targeted tax cuts to reinforce the spirit of enterprise and get our local and national economies moving again.”

A Treasury spokesperson said: “Since the election, real wages have risen more than the first ten years of the previous government and last year we defied expectations on growth, with the OBR, Bank of England, IMF, OECD and BCC all upgrading their forecasts.

“We’ve eased the cost of living by raising the national living and minimum wages, taking £150 off energy bills, freezing prescription fees and, for the first time in 30 years, rail fares all while driving growth through billions in new capital spending.”