Rachel Reeves has “damaged the economy” by causing a downturn in consumer confidence with her repeated warnings of tax rises in the Budget, the former boss of Sainsbury’s has said. 

Asked on the Today programme if the backdrop of bad news in the lead up to next month’s Budget was “damaging the economy” by causing people not to buy things, Justin King said: “Yes, [but] I think you have to do that. I think they’d argue you step backwards before forwards. 
“They’ll want the budget not to feel as bad as people are expecting, so you might as well get the bad news out beforehand.”

The Chancellor has repeatedly warned of looming “difficult decisions” on tax, with experts fearing raids on capital gains, inheritance and pension contributions.

Ms Reeves’ critics suggest the situation is better than she claims. She is being urged to restore winter fuel payments for millions of pensioners after the Bank of England handed the Chancellor a fiscal boost worth up to £10bn.

The Bank said on Thursday it would slow down the sales of government bonds amassed during lockdown. The decision will give Ms Reeves more breathing room at next month’s Budget because of the way the scheme is accounted for on the Government’s balance sheet.

Baroness Altmann, a former pensions minister, encouraged the Chancellor to use the extra headroom to reverse her decision to strip 10m pensioners of a payment of £300 this winter.