The Institute for Fiscal Studies (IFS) has warned workers could face a £10billion raid on income tax this month as Rachel Reeves risks breaking her borrowing rules.
Economists at the think tank said the chancellor has little room to hit the fiscal targets she set in October and "has engineered a trap for herself."
This means Ms Reeves could be forced to raise taxes in an effort to plug finances by extending the freeze in income tax thresholds "by stealth," the IFS added.
The Telegraph reports that under the changes announced in October, the chancellor pledged to borrow only to invest, as opposed to funding day-to-day government spending, and to get debt falling as a share of GDP.
However, borrowing costs in the current financial market and Donald Trump's looming trade war has meant there is uncertainty in the global market.
Matthew Oulton, of the IFS, added: “Rachel Reeves has engineered a trap for herself, albeit in difficult circumstances. Aiming to meet inflexible, pass-fail fiscal targets by the slimmest of margins was a risky strategy from the outset.
“It was always possible that economic conditions would deteriorate, put her on track to miss those rules, and push her into making tax and spending changes at what isn’t supposed to be a fiscal event later this month."
The IFS said that extending the Conservatives’ stealth tax freeze on income tax thresholds by another two years, raising around £10billion of extra revenue in 2029 to 2030.