Rachel Reeves faces the prospect of another “groundhog day” unless next month’s budget goes further than plugging an estimated £22bn black hole in the public finances, according to a respected thinktank.

It comes as latest official figures showed the UK economy grew 0.3% in the three months to August, limited growth, despite the Treasury saying it is the fastest growth in the G7.

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The Institute for Fiscal Studies (IFS) said there was a “strong case” for the chancellor to substantially increase the £10bn headroom she has previously given herself against her own debt rules, or risk further repeats of needing to restore the buffer in the years ahead.

It said Ms Reeves could bring the cost of servicing government debt down through ending constant chatter over the limited breathing space she has previously given herself, in uncertain times for the global economy.

The chancellor herself used an interview with Sky News this week to admit tax rises were being considered, and appeared to concede she was trapped in a “doom loom” of annual increases.

What is the chancellor facing?

Speculation over the likely contents of the budget has been rife for months and intensified after U-turns by the government on planned welfare reforms and on winter fuel payments.

The Office for Budget Responsibility’s determination on the size of the black hole facing Ms Reeves could come in well above or below the IFS estimate of £22bn, which includes the restoration of the £10bn headroom but not the cost of any possible policy announcements such as the scrapping of the two-child benefit cap.

Economists broadly agree tax rises are inevitable, as borrowing more would be prohibitive given the bond market’s concerns about the UK’s fiscal position.

Long-term borrowing costs have recently stood at levels not seen since the last century.

What are her tax options?

While there has been talk of new levies on bank profits and the wealthy, to name but a few rumours, the IFS analysis suggests the best way to raise the bulk of sufficient funds is by hiking income tax, rather than making the tax system even more complicated.

Earlier this week, it suggested reforms, such as to property taxes, could raise tens of billions of pounds.

But any move on income tax would mean breaking Labour’s manifesto pledge not to target the three main sources of revenue from income, employee national insurance contributions and VAT.

She is particularly unlikely to raise VAT, as it would risk fanning the flames of inflation, already expected by the International Monetary Fund to run at the highest rate across the G7 this year and next.

Business argues it should be spared.

The chancellor’s first budget, which raised taxes by £40bn, has been blamed by the sector for raising costs in the economy since April via higher minimum pay and employer national insurance contributions.

They say the measures have dragged on employment, investment, and growth.

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‘A situation of her own making’

Analysis by Barclays, revealed within the IFS’s Green Budget, suggested inflation was on course to return to target by the middle of next year but that the UK’s jobless rate could top 5% from its current 4.8% level.

Ms Reeves, who has blamed the challenges she faces on past austerity, Brexit and a continuing drag from the mini-budget of the Liz Truss government in 2022, was urged by the IFS to not harm growth through budget measures.

IFS director Helen Miller said: “Last autumn, the chancellor confidently pronounced she wouldn’t be coming back with more tax rises; she almost certainly will.

“For Rachel Reeves, the budget will feel like groundhog day. This is, to a large extent, a situation of her own making.

“When choosing to operate her fiscal rules with such teeny tiny headroom, Ms Reeves would have known that run-of-the-mill forecast changes could easily blow her off course.”

Ms Miller said there was a “strong case for the chancellor to build more headroom against her fiscal rules”, adding: “Persistent uncertainty is damaging to the economic outlook.”

‘No return to austerity’

A Treasury spokesperson responded: “We won’t comment on speculation. The chancellor’s non-negotiable fiscal rules provide the stability needed to help to keep interest rates low while also prioritising investment to support long-term growth.

“We were the fastest-growing economy in the G7 in the first half of the year, but for too many people our economy feels stuck. They are working day in, day out without getting ahead.

“That needs to change, and that is why the chancellor will continue to relentlessly cut red tape, reform outdated planning rules, and invest in public infrastructure to boost growth – not return to austerity or decline.”

The budget is scheduled for 26 November.

A woman who accompanied her husband as he took his own life at the Dignitas clinic in Switzerland has been told by police she will not face criminal charges.

Louise Shackleton had been under investigation for assisted suicide since handing herself in to police after her husband Anthony’s death in December.

The 59-year-old had been battling motor neurone disease for years and Mrs Shackleton said they had discussed at length his decision to end his life.

In April, she told Sky News she accepted she had committed a crime but had no regrets over supporting her husband.

But North Yorkshire Police has now confirmed she will face no action.

In a statement the force said: “This has clearly been a complex and sensitive investigation which has required detailed examination by the Crown Prosecution Service.

“Whilst they concluded the evidential test had been met regarding assisted suicide, it was decided not to be in the public interest to prosecute.

“Our thoughts remain with Mr Shackleton’s family.”

‘We’re treated like criminals’

Mrs Shackleton told Sky News she was not surprised by the decision but was critical of the time it had taken.

“In reality, I didn’t commit a crime,” she said.

“The reality is I enabled my husband to get to a place he wanted to be, and to do what he wanted to do.

“I knew nothing would come of it because there was no coercion.

“I could have stopped him, but why would I do that? Why would I stop his will? He died like he lived, with dignity.

“The regret I have is other people are going to have to make this journey and be left in limbo like I’ve been left in.

“People shouldn’t have to go through this.

“In the darkest days of our lives, we’re treated like criminals and that is just unfair.”

Mrs Shackleton said she was sad her husband could not choose to die surrounded by his family in his own home.

She added: “It makes me dreadfully sad, and my heart aches that at least one person a week, just from England, is having to make that journey and their loved ones, in the deepest darkest part of their lives, are going to have to go through a police investigation.”

It has been legal to help someone die in Switzerland since 1942 – provided the motive is not “selfish”.

The country’s Dignitas group has become well-known as it allows non-Swiss people to use its clinics.

Will UK legalise assisted dying?

Mrs Shackleton has become a vocal supporter of legislation going through parliament to legalise assisted dying.

It would permit a person who is terminally ill and with less than six months to live to legally end their life.

The law in the UK currently prohibits people from assisting in the suicide of others, but prosecutions are rare.

Opponents to the assisted dying bill have raised concerns about the safety of vulnerable people and the risk of coercion and a change in attitudes toward the elderly, seriously ill and disabled.

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Mrs Shackleton chose to speak out publicly to honour a promise made to her husband to push for people to have choice, and believes he would be proud of her campaigning.

“People should have the right to a choice,” she said.

“I know people will say they don’t agree with that, that’s absolutely fine, I respect that, but because you don’t want something doesn’t mean you should stop someone else doing it.”

A final farewell

During the police investigation, she avoided opening her husband’s laptop in case it would have been needed as evidence. Since the investigation has been closed, she has opened that laptop and found the last letter her husband wrote to her.

“For nearly 10 months I’d been denied that letter, a letter that could have helped a lot,” she said.

“And I was denied it, and that’s wrong.”

Johnson & Johnson (J&J) is facing legal action from thousands of people in the UK who are accusing the global healthcare giant of knowingly selling talcum powder contaminated with asbestos.

More than 3,000 people allege they or a family member developed forms of ovarian cancer or mesothelioma from using Johnson’s baby powder between 1965 and 2023.

A lawsuit has been filed by KP Law at the High Court in London seeking damages against J&J and Kenvue UK, which was split from the former in 2023 and now operates as a separate business.

The lawsuit alleges J&J’s product was contaminated with carcinogenic fibres, including asbestos, and the firm concealed the risk to the public for decades.

J&J stopped selling talc-based baby powder in the US in 2020, switching to a cornstarch product. It did the same globally in 2023.

Kenvue said in a statement that J&J baby powder “did not contain asbestos, and does not cause cancer”.

J&J is separately facing tens of thousands of lawsuits in America, where claimants allege they were diagnosed with cancer after using baby powder and other talc products.

Last week, J&J was ordered to pay $966m (£720m) to the family of a woman who died from mesothelioma, one of the largest awards against the firm, although the amount could be reduced on appeal.

Damages awarded by UK courts are generally more restricted.

What is the legal claim being made?

Talc is a naturally occurring mineral which is mined. But Michael Rawlinson KC, who is representing the claimants, said in court documents that “there exist very few, if any, commercially exploited talc deposits in the world which do not contain asbestos”.

He also alleged that reports from such mines, J&J’s own research, and existing scientific literature would all have informed J&J about asbestos contamination.

Despite this, Mr Rawlinson claimed the company “suppressed information that might indicate that baby powder was contaminated with asbestos”, “lobbied regulators” to enable the continued sale of its product, and sponsored studies to “downplay the dangers” to human health.

Read more from Sky News:
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Talcum powder lawsuit approved

‘We were told talc was good for you’

Janet Fuschillo, one of the claimants, was diagnosed with ovarian cancer seven years ago.

The 75-year-old said she used J&J’s baby powder since the 1960s: “I used talc on myself and all four of my children because we were told it was pure, and it was good for you.”

Patricia Angell said her husband Edward died in 2006, aged 64, a few weeks after being diagnosed with mesothelioma.

“He would come home from work and shower every day and use J&J’s talc,” she said.

“Talc was mentioned on Edward’s autopsy report, along with asbestos strains found in contaminated talc.”

Mesothelioma, a form of cancer, is almost always caused by asbestos exposure, according to the NHS, and it commonly forms in the lungs after people inhale the microscopic fibres.

Baby powder ‘does not cause cancer’

A Kenvue spokesperson said: “We sympathise deeply with people living with cancer.

“We understand that they and their families want answers – that’s why the facts are so important.

“The safety of Johnson’s baby powder is backed by years of testing by independent and leading laboratories, universities and health authorities in the UK and around the world.

“The high-quality cosmetic grade talc that was used in Johnson’s baby powder was compliant with any required regulatory standards, did not contain asbestos, and does not cause cancer.”