<h1>Labour faces fiscal squeeze: tax hikes, cautious giveaways as fragile markets and party unrest shadow key budget</h1> Britain's Labour government is preparing a high-stakes annual budget amid weak growth, high inflation, and elevated public debt near 95% of GDP. The treasury chief is expected to prioritize fiscal consolidation and market confidence, constrained by a political refusal to impose major spending cuts and internal resistance to welfare reductions. Likely measures include additional tax increases, potentially targeting high-value property and electric vehicle usage, offset by limited reliefs such as higher pensions and frozen rail fares. The government must avoid unfunded commitments that could trigger adverse bond-market reactions, as seen under a prior administration, while deteriorating poll ratings raise the risk of intra-party moves against the prime minister if the budget further erodes public support.