On the brink... where will axe fall in Budget?

WITH Rachel Reeves's first Autumn Budget on November 26 fast approaching, speculation is mounting over where the axe will fall.

- By HARVEY JONES

The Chancellor faces a gaping hole in the public finances, and every rumour of a new tax rise or threshold tweak seems to add to the confusion.

Tom Pugh, chief economist at accountancy group RSM, said this year's Budget is shaping up to be every bit as critical as last year’s, which was dubbed the “biggest in a generation”.

Slowing growth has wiped out the £10billion of fiscal headroom Reeves clung onto in March.

“The Chancellor may have to tighten fiscal policy by £30billion to £40billion. That's a tall order given Labour's promise not to increase taxes on working people.”

Here's a look at what she might do.

INCOME TAX

The Chancellor was expected to become the first in 50 years to raise the basic rate of income tax.

A 1p or 2p rise would raise up to £20billion but anger voters by breaking a manifesto promise.

Last Friday, it seemed that Reeves had changed her mind, deciding the electoral damage would wipe out the fiscal gains.

However, she may still extend frozen thresholds - which have dragged millions into higher tax bands - to 2030.

NATIONAL INSURANCE

There was talk that Reeves had hit upon a convoluted method of getting pensioners to start paying NI.