Labour will hike taxes at the Budget, two thirds of Brits predict in new poll ahead of 'critical test' for Chancellor

Almost two thirds of Britons expect Labour to hike taxes at Andy Burnham's first Budget as Prime Minister next week, according to a new poll.

Some 58 per cent of people think the country is heading in the 'wrong direction', compared to just 18 per cent who believe things are looking up, the research by Ipsos found.

The pollster said that Chancellor John Healey faces a 'critical test' on 28 October as public optimism about the economy 'remains stubbornly subdued by historic standards'.

Some 65 per cent of Britons expect Labour to announce tax rises next week, compared to just five per cent of people who think taxes will be lowered, the Ipsos poll found.

This comes despite Labour already raising the tax burden to a post-war high, with former chancellor Rachel Reeves hiking tax by £75billion at the previous two Budgets.

There are fears of even more pain to come under Mr Healey, with a raid on banks, capital gains tax, and bookmakers all said to be under consideration.

The poll also found that 51 per cent of the public expect Government borrowing to increase after the Budget, while almost a third think Labour will increase spending on public services.

Meanwhile 30 per cent of Britons think Mr Burnham will increase spending on benefits at the Budget - despite the ballooning welfare bill being forecast to hit £400billion by the end of the decade. However 28 per cent of the public said they expect Labour to reduce welfare spending, the poll found.

Alex Bogdan, research director at Ipsos, said: 'Our latest insights reveal an electorate that is acutely conscious of the tightrope Chancellor John Healey must walk when it comes to the Budget, as they themselves are facing economic anxieties and difficult trade-offs when we ask about their own household budgets.'

She added: 'Public judgment can be swift, and with 65 per cent of the public now expecting tax rises, it is clear is that the upcoming Budget could serve as a critical test for the Government when it comes to public opinion and political fortunes for the year ahead.'

However a separate poll commissioned by one of Labour's union paymasters suggested that many people want to see higher taxes on the wealthy, banks and big businesses at next week's Budget.

The research, commissioned by UNISON and carried out by YouGov, found 69 per cent of people support increasing taxes on the wealthiest to fund public services. Three quarters said that large corporations should pay a bigger share and 61 per cent back tax rises for banks.

The trade union said it is 'encouraging' that Mr Healey 'appears to be considering getting banks to pay more' following reports the Chancellor is set to increase taxes on the banking sector.

UNISON general secretary Andrea Egan said: 'Massive investment to rebuild public services and restore wages is urgently needed. 

'It should be paid for by taxing the wealthiest. These are common sense policies, backed by a large majority of the public.'

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