Britain’s National Institute of Economic and Social Research said Chancellor of the Exchequer Rachel Reeves is on course for a day-to-day budget deficit of about £41 billion by 2029-30, rising to roughly £51 billion if she reinstates a previously scrapped £9.9 billion fiscal buffer. The shortfall would leave the new Labour government facing what the think tank calls an “impossible trilemma” of large tax increases, deeper spending cuts or the abandonment of self-imposed borrowing rules ahead of the autumn Budget. Reeves has pledged to balance current spending with tax revenues by the end of the decade and to reduce debt as a share of GDP, while also promising not to raise the main personal tax rates on working people. NIESR’s analysis argues those commitments cannot coexist without new revenue and suggests a sustained rise in income or property taxes, warning that failure to act risks unsettling bond markets and raising borrowing costs. The institute nudged its 2025 growth projection up to 1.3% but lowered forecasts for subsequent years, citing weaker global demand after U.S. tariffs and recent U-turns on welfare and fuel-duty reforms. Inflation is expected to average 3.3% this year before easing, allowing the Bank of England to begin cutting rates later in 2025. Even so, the report says living standards for the poorest households will fall as rising rents and frozen tax thresholds bite. Reeves already raised about £40 billion of taxes in her first fiscal package last year. Several private-sector economists put the forthcoming Office for Budget Responsibility gap nearer £20 billion, but NIESR’s darker outlook underscores the fiscal squeeze confronting the chancellor as she drafts a Budget likely to be delivered in October or November.