The prime minister has refused to say whether further tax rises will be imposed in the spring statement.

Sir Keir Starmer said the government was in the “early stages” of looking at whether tax rises or spending cuts were needed to meet Labour’s self-imposed fiscal rules.

He would not say if Ms Reeves is looking at further tax cuts to give her more headroom after months of economic downturn, and said the “big decisions” on tax were made in the October budget.

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Speaking to reporters on the plane to Washington DC to meet Donald Trump, he said: “Obviously I am not going to get ahead of myself until we have made decisions.

“But as I have said before, in terms of the big decisions on tax obviously the budget was the place that we took those decisions – but as ever, going into a statement I am not going to say in advance what we might do and what we might not do.

“But let me not set hares running, the big decisions were in the budget of last year and that’s the way we are approaching this spring statement.”

It is less than a month away from the spring statement on 26 March, when the Office for Budget Responsibility (OBR) will publish its forecast on the UK economy.

Chancellor Rachel Reeves will set out the fiscal watchdog’s toplines, which are widely expected to be a reduction in growth outlook and will warn the chancellor is at risk of breaching her fiscal rules.

Former Bank of England governor Lord Mervyn King told Sophy Ridge’s Politics Hub programme on Wednesday that income taxes will have to rise to plug the UK’s financial blackhole.

He said taxes would need to be increased to accommodate both a rise in defence spending, announced on Tuesday, and public services reform.

“The obvious tax to raise is the basic rate of income tax, we will all contribute to it,” he said.

Lord King added he would not have raised employers’ national insurance contributions, as Ms Reeves did in October, but would instead have increased employees’ income tax.

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The OBR is required to produce two economic forecasts a year, but, the chancellor said she would only give one budget a year to provide stability and certainty on upcoming tax changes.

However, there is speculation about tax changes due to the poor economic climate since the autumn budget.

Inflation has risen to its highest level in 10 months to 3%, there has been a sharp rise in government bond yields and growth has not been as high as expected.

This has led to the chancellor’s £9.9bn headroom against her fiscal rules being all but wiped out.

Ms Reeves could extend a freeze on income tax bands and allowances beyond April 2028, dragging more people into paying more tax as their pay rises.

She is reportedly considering lowering the annual limit on how much people can put into cash ISAs from £20,000 to £4,000.