This will be unwelcome news for hard pressed taxpayers as the six-year freezing of tax thresholds and the tax free allowance since 2021 means that millions will be dragged into higher rates of tax over the next few years.

What is most concerning is that the Institute for Fiscal Studies (IFS) estimated that the overall number of taxpayers paying the 40% higher rate and 45% additional rate is forecast to more than double to 8.9 million in 2027–28 from 4.4 million in 2020–21, meaning that 18% of the workforce will be paying tax at 40% or more in the near future.

The freeze in personal tax allowances and thresholds is exacerbated by high inflation rates and is set to raise an additional £30bn to £32bn in tax for the Treasury this tax year, and an estimated £52bn in 2027-28. This would be 40% more than the current Office for Budget Responsibility forecast and the equivalent of an eye-watering 6% increase in basic income tax to 26%.

‘The increasing size of the real-terms cut to the personal allowance and higher rate threshold, and the increasing shares of adults brought into tax and brought into higher rate tax as a result, might add to political pressure to curtail the freeze before it reaches its sixth year,’ said the authors of the IFS Green Budget.

The IFS is also calling for a review of the full-expensing capital allowances scheme, which runs for three years until April 2026. Although it costs up to an estimated £10bn to fund the tax relief, it drives investment and creates jobs, adding to the argument to make it permanent.

This would be welcome by business leaders who have criticised the government for the constant changes to tax rules and reliefs, adding to complexity and compliance costs, while the IFS said the short-term nature of the measure is ‘not a good way to make policy’.

The IFS warned that ‘an unfunded package of pre-election tax cuts might give a short-term economic sugar rush, but could prove unsustainable and ultimately mean a protracted recession as interest rates rise even further to bring inflation back under control’.

Paul Johnson, director of IFS, said: ‘We are in a horrible fiscal bind. With taxes at record levels, and government revenues forecast to exceed non-interest spending for the first time in a generation, you might expect plenty of room for either tax cuts or spending increases.

‘But poor growth and very high spending on debt interest over the next few years mean that the national debt is stuck at close to 100% of national income, even with tight spending settlements and further big tax rises in the pipeline.

‘The price of our high levels of indebtedness, failure to stimulate growth, and high borrowing costs is likely to be a protracted period of high taxes and tight spending.’

The UK economy remains stuck between weak growth on the one hand and the risk of persistently high inflation on the other, the IFS stressed in its pre-Statement Green Budget.

UK GDP is still 5.2% short of its 2012 to 2019 trend: a worse relative performance than either the US or the Euro area where the shortfalls range between 2% and 3%. There are signs of a turning point in the labour market: unemployment has increased from 3.5% in the 2022 trough to 4.3% now; Citi expect an increase to 5.8% by the end of 2024. Citi also expect a moderate recession through the first half of 2024, owing to weak corporate margins and policy tightening.

The Autumn Statement will be held on Wednesday 22 November.