Charged with reviving financial markets and reducing the risk of a further recession, UK Finance Minister Jeremy Hunt said he would have to raise taxes in his budget plan.
As previously announced, the new budget to be presented on Thursday this week is believed to show the government increasing taxes and cutting spending.
This follows former Prime Minister Liz Truss's 'mini budget' which triggered a crash in the bond market and caused borrowing costs to skyrocket in September.
Citing an interview with Hunt and the Sunday Times, he is said to be planning to tackle a £55bn 'fiscal hole' in Britain's budget by freezing the limits and allowances of income tax, national insurance, inheritance tax and pensions for two years.
The 'fiscal hole' does not mean the budget deficit or the level of public debt, but it is the gap in public finances between what the government expects and targets.
In this context, Hunt wants public debt to fall as a share of gross domestic product, and he is targeting a five-year period to achieve that target.
Meanwhile in a separate interview with the BBC, the finance minister expressed his concern over the issue of labor shortages in the UK which is seen to have a greater impact on the economy than Brexit.
He promised to work on addressing the constraints faced by businesses in hiring through his upcoming budget.
