Reeves vows to defy economic gloom despite raft of grim forecasts ahead of crunch Budget

Writing in the Guardian, the Chancellor acknowledged that productivity forecasts from the Office for Budget Responsibility (OBR) could make for tough reading.

And she argued that austerity, Brexit and the pandemic had left "deep scars" on the UK's economy.

But she said she was "determined that we don't simply accept the forecasts but we defy them" and would not "relitigate the past or let past mistakes determine our future".

Her comments come as she prepares to deliver a Budget next month widely expected to involve further tax rises as she seeks to close a multi-billion pound gap in her plans.

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The Institute for Fiscal Studies (IFS) warned earlier this month that Ms Reeves could need to find £22 billion of tax rises or spending cuts if she is to restore the £10 billion of headroom she left herself against her debt targets in the spring.

That gap is the result of higher borrowing costs, more persistent inflation and weaker growth, along with spending commitments such as partially reversing the cut to winter fuel payments and watering down its plans to cut welfare.

Ms Reeves will hope that better-than-expected inflation figures and a slight improvement in some growth forecasts will help ease the pressure.

But the gap could be even bigger than feared, following media reports that the OBR is preparing to downgrade its productivity forecasts by 0.3 percentage points.

Each percentage point downgrade means the Chancellor needs to find around £7 billion to meet her plans, and the IFS forecast suggested a downgrade of only 0.2 points.

This could leave the Chancellor with a gap of almost £30 billion, even before she tries to pay for the expected abolition of the two-child benefit cap.

Writing in the Times, former chancellor Sir Jeremy Hunt described the downgrade as a "hammer blow" to Ms Reeves' plans and urged her to "transform" public sector productivity.

In a further blow to the Chancellor, the Times also reported that housebuilders had written to the OBR warning that Labour would not meet its target to build 1.5 million new homes.

The letter is likely to harm prospects for the watchdog upgrading its forecast for economic growth from construction.

In her Guardian article, Ms Reeves said she would not "pre-empt" the OBR productivity downgrade, but added she would be "candid" that Britain's productivity performance under the Conservatives had been "too weak".

In response, she appeared to rule our deeper spending cuts, vowing there would be "no return to austerity".

She said: "If productivity is our challenge, then investment is our solution."

But she also appeared to rule out increases in borrowing, saying investment "cannot come at the cost of economic responsibility".

Without deeper spending cuts or increased borrowing, the Chancellor will be left with little choice but to raise taxes.

And while Labour's manifesto promised the party would not raise income tax, economists at the IFS told the Independent that trying to bridge the gap with smaller taxes risked causing "unnecessary amounts of economic damage".